Centre to Review IMMA Demand for Uniform 5% GST on All Micronutrients; Industry Warns Against Higher Tax Slabs

 

Finance Ministry acknowledges inverted duty pain; GST 2.0 rollout to include faster refund mechanism

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The Union Finance Ministry has agreed to examine a key demand from the Indian Micro-Fertilizers Manufacturers Association (IMMA) — bringing all micronutrients and related products under a uniform 5% GST slab. The issue will now be reviewed in consultation with the Agriculture Ministry, officials confirmed following a meeting between IMMA representatives and the Central Board of Indirect Taxes and Customs (CBIC) on September 12.

Industry Seeks Uniform GST to Avoid Cost Escalation

IMMA has requested the government to keep all fertilisers covered under the Essential Commodities Act (ECA) and Fertiliser Control Order (FCO) — including:

• Micronutrients
• Micronutrient mixtures
• Non-subsidised grades

within the 5% GST category, arguing that higher tax slabs would:

• Increase input costs
• Raise farm-gate prices
• Put pressure on manufacturers’ working capital
• Hurt small and marginal farmers

Concern Over Inverted Duty Structure

Officials acknowledged the industry’s long-standing worry over the inverted duty structure, where inputs attract 18% GST while many fertiliser products face lower output GST rates.

Key points from the meeting:

• Inverted duty will persist as long as multiple GST slabs exist
• Refunds cannot be issued for dealers' stock-in-trade under current law
• Dealers must adjust GST credits against future liabilities

For manufacturers, however, the government recognises the challenge of paying 18% GST on inputs.

GST 2.0 to Bring Faster Refunds

Officials assured IMMA that a speedy refund mechanism will be introduced alongside the rollout of GST 2.0, scheduled to start on September 22.
This aims to ease cash flow pressures arising from inverted duty.

Industry Requests 30-Day Refund Cycle

IMMA has urged the government to:

• Avoid placing fertilisers in the 18% GST slab
• Accelerate refunds for accumulated tax credits
• Introduce a 30-day time-bound refund window for fertiliser manufacturers

IMMA warned that without rationalisation, the micronutrient industry would suffer blocked working capital, likely resulting in higher retail prices for farmers.

Industry Vows No Profiteering

In return, IMMA assured the government that the industry will:

• Not indulge in profiteering
• Pass on any tax savings directly to farmers
• Maintain current MRPs or reduce prices wherever possible

Next Steps

The Finance Ministry and Agriculture Ministry will hold detailed consultations on the feasibility of establishing a uniform GST slab for all micronutrient products.
Industry stakeholders are hopeful that the government will prioritise farmer affordability and industry viability in the final decision.