The agriculture sector held discussions with officials of the CBIC to address challenges arising from the recent GST rate cuts on fertilisers and related products. While the move was aimed at lowering farm input costs, industry representatives warned that accumulated input tax credits (ITC), tax inversion and uneven implementation could dilute the intended benefits.
Fertiliser Industry Concerns
Rahul Mirchandani, President of the Indian Micro-Fertilizers Manufacturers Association, said nearly Rs 400 crore worth of accumulated credits on existing inventory may remain blocked due to the change.
"We have flagged it to CBIC. The rate cut does not cover all micronutrients used in fertilisers, so the expected cost reduction may not materialise fully. Moreover, the cut has been implemented for manufacturers, but a similar move for traders and importers is essential to ensure smooth transition," Mirchandani said, adding that the CBIC has assured possible relief measures by year-end.
Tractor Industry Raises Tax Inversion Issue
The tractor industry also pressed for resolution of long-standing concerns. Bharat Madan, CFO of Escorts Kubota Ltd and Chairman of the Finance Committee at the Tractor and Mechanisation Association, highlighted that the sector continues to face tax inversion in certain goods taxed at 18%.
"The tractor industry is still facing inversion in certain goods taxed at 18%. We have sought relief on this as well as on accumulated credits stuck with dealers. About Rs 800-900 crore worth of credits are likely to get blocked in dealer warehouses," Madan said.
He stressed that dealer-level inventories must not be penalised due to timing mismatches in tax cuts, urging CBIC to provide relief on both inversion and stuck credits.
CBIC Response
According to industry participants, CBIC officials acknowledged the concerns and indicated that relief measures could be announced later this year to smoothen the transition.
The GST Council's rate rationalisation was designed to ease pressure on farmers by lowering input costs, but industry leaders cautioned that unless issues such as blocked ITC and tax inversion are addressed promptly, the policy's impact may fall short.
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