The Central Board of Indirect Taxes and Customs (CBIC) has assured the Indian Micro-Fertilizers Manufacturers Association (IMMA) and the Fertiliser Association of India (FAI) that a speedy refund mechanism will soon be notified to address challenges arising from the inverted duty structure faced by micronutrient manufacturers.
At a meeting held on Friday at North Block, the CBIC chairman acknowledged industry concerns regarding the higher GST rate of 18% on inputs, which has created a mismatch with the lower output tax rates. Officials confirmed that a notification on refunds would be issued alongside the upcoming GST 2.0 notification.
Industry representatives also highlighted the need for uniform GST treatment for all micronutrients listed under the Fertiliser Control Order (FCO). In response, the CBIC stated that the matter would be referred to the Ministry of Agriculture for further review.
On the issue of dealers' demand for refunds of GST paid on stock-in-trade, the Board clarified that such refunds are not permissible under current law and instead must be adjusted against future tax liabilities.
Both IMMA and FAI urged the government to ensure a level playing field for manufacturers, traders and importers of notified micronutrients by harmonizing GST treatment. However, the CBIC reiterated that the inverted duty structure will continue as long as multiple GST rates remain part of the tax regime.
The fertilizer industry, especially micronutrient producers, has long raised concerns that the inverted duty structure strains working capital and creates compliance hurdles. The assurance of a faster refund mechanism is expected to provide significant relief once implemented.
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