India’s Fertilizer Industry Urges 5% GST on Fertiliser Inputs

28 August 2025, New Delhi: The fertiliser industry continues to face serious challenges under the current GST framework. While P&K fertilisers are taxed at 5% GST, key raw materials used in their production—such as ammonia and sulphuric acid—attract 18% GST. Packing materials and other inputs are also taxed at rates higher than 5%.

Since fertiliser subsidy is excluded from the value of supply under GST, the output tax payable is far lower than the input tax credit available. This mismatch has led to large amounts of unutilised Input Tax Credit (ITC) piling up with fertiliser companies. The inability to claim refunds on this accumulated ITC is straining working capital and affecting the timely procurement of raw materials and finished products.

Against this backdrop, a delegation from the Fertiliser Association of India (FAI), comprising Dr. P.S. Gahlaut, Managing Director, Indian Potash Limited; Dr. Suresh Kumar Chaudhari, Director General, FAI; and Mr. S. Sankarasubramanian, Co-Chairman, FAI and Managing Director & CEO, Coromandel International Limited, met Union Finance Minister Nirmala Sitharaman on 26th August 2025. The delegation requested the reduction of GST on fertiliser raw materials from 18% to 5% and urged the Government to allow refunds of accumulated ITC in cases where accumulation is caused by the subsidy portion being non-taxable. A formal representation was also submitted.

The industry now awaits a positive resolution of the long-pending issue of input tax credit refunds.

Also Read: Possible Decline in Wheat Production in India, Says Agriculture Minister

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