The agriculture sector met officials of the Central Board of Indirect Taxes and Customs (CBIC) today to discuss the smooth transition of recent GST rate cuts on fertilisers and related products.
While the move aims to reduce farm input costs, industry representatives flagged serious concerns around accumulated input tax credits (ITC), tax inversion, and uneven implementation that could blunt the intended benefits.
Rahul Mirchandani, President of the Indian Micro-Fertilizers Manufacturers Association, said nearly ₹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 explained.
He added that CBIC has assured the association that relief measures could be introduced by the end of the year.
Similarly, the tractor industry also pressed for resolution of long-pending issues. Bharat Madan, CFO of Escorts Kubota Ltd and Chairman of the Finance Committee at the Tractor and Mechanisation Association, said the sector is still grappling with tax inversion.
“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 ₹800–900 crore worth of credits are likely to get blocked in dealer warehouses,” he said.
According to Madan, the association has specifically sought CBIC’s intervention to ensure that dealer-level inventories are not penalised by the timing of the tax cuts. “We have sought a relief on the inversion and on accumulated credits due to inventory in stock at dealers,” he noted.
CBIC, in response, assured stakeholders that their demands would be looked into and hinted that some relief could be announced later this year.
The GST Council’s rate rationalisation was aimed at easing pressure on farmers by lowering the cost of key inputs. However, industry leaders warn that unless transition issues such as stuck credits and inversion are addressed promptly, the financial stress on manufacturers, traders, and dealers could undermine the policy’s impact.
