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Fertilizer, tractor parts to cost less: Relief to farmers, hours before GST rollout

Fertilizer dealers and farmers protested in Punjab against the GST rates. Also, several state representatives highlighted how a rise in fertilizer prices would hurt farmers.

business Updated: Jul 06, 2017 09:57 IST
Suchetana Ray
Suchetana Ray
Hindustan Times, New Delhi
GST,GST Council,Fertilizer
Agriculture is the economic mainstay of a large section of Indians, who depend on fertilizers and tractors for a good harvest.(HT File Photo)

The GST Council provided relief to farmers reducing the tax rates on fertilizers from 12% to 5% and tractor parts from 28% to 18%, hours before the Friday midnight transition to the new system.

The fertilizer industry was disappointed with the previous rates and made several representations to the government. In the pre-GST era, taxes on fertilizer ranged from 0-6% across states. A 12% rate would have made the product costlier.

“Consensus in the council was to bring the rate down to 5% so that fertilizer price does not go up,” said finance minister Arun Jaitley at the end of the 18th GST Council meeting in New Delhi.

Chaired by Jaitley with state ministers and bureaucrats as members, the council is the highest decision-making body for the new goods and services tax. The GST will replace about 20 central and state taxes and unite Asia’s third-largest economy and 1.3 billion people into a single market.

Retail price of urea, which is fixed by the government, is at Rs 5,360 per tonne now. The prices of DAP and potash, fixed by private companies, are at Rs 22,000 and Rs 11,000 for each tonne.

Fertilizer dealers and farmers protested in Punjab against the GST rates. Also, several state representatives highlighted how a rise in fertilizer prices would hurt farmers.

Tractor manufacturers too have appealed to the government to reduce the tax on components to 18%. An industry association presented its case before the GST Council, saying tractor parts will become expensive unless the tax slab is lowered.

The decision to lower taxes on fertilizer is viewed as an attempt to salve mounting anger among farmers across states over dwindling crop income, largely because of a supply glut and a cash crunch triggered by the government’s demonetisation move last November.

Agriculture is the economic mainstay of a large section of Indians, who depend on fertilizers and tractors for a good harvest.

This year, four states announced financial bailouts to assuage farm distress that has seen dozens of farmers killing themselves after failing to repay crop loans.

GST has four tax slabs from 5% to 28%, with cess being applicable on certain sin and luxury products such as aerated drinks and expensive cars.

The new indirect tax kicked in from July 1. The government has time and again assured that tax rates can be tweaked even after the GST’s implementation. Such decisions will be taken by the council, which will meet on the first Saturday of every month for the first three months since the GST rollout.

(With ANI inputs)

First Published: Jun 30, 2017 23:42 IST