iGrain India - New Delhi. Fertilizer companies are going to get some relief soon as the GST Council is expected to recommend publishing a circular for releasing refund dues.
As a result of inverted duty structure and subsidy, the companies are likely to get refund dues. A meeting of the GST Council is expected after the general elections in which such a recommendation can be made.
Under the inverted duty structure, the rate of duty is higher on inputs while it is lower on finished products. 5 percent GST is applicable on fertilizers while 18 percent GST has been imposed on the components (inputs) like ammonia and packaging material used in it.
Although the central government provides subsidy on urea and C&K fertilizers, different methods are adopted for its calculation.
The most consumed fertilizer is sold to farmers at a statutory maximum notified retail price of Rs 242 per bag (45 kg) but this does not include coating charges and other taxes.
The difference between the cost of production of urea and the price provided to farmers is met by the government through subsidy.
This subsidy is provided to the manufacturers / importers of urea under the Nutrient Based Subsidy Policy. Under this policy, fertilizer companies have to fix the MRP of their products and the government keeps a close watch on it.