The GST Council, responsible for tax rate decisions has yet to resolve the tax discrepancies despite multiple discussions and recommendations
For over five years now, the fertilizer industry has been facing an ‘inverted duty structure’. Inverted duty structure refers to a situation in which raw materials (RMs) are taxed at a higher rate than finished products in whose manufacture these are used. But, there was little that the Budget presented by the Union Finance Minister (UFM) Nirmala Sitharaman on July 23, 2024, could do to address it.
Fertilizers and RMs used in their making are mostly taxed under the GST (Goods and Services Tax) regime. The GST Council – headed by the UFM that includes finance ministers from all States and UTs – has the mandate to fix tax rates besides deciding the procedures for registration, payment of taxes, GST return filing, and other related matters. So, the responsibility for fixing any anomalies in their taxation also lies with the GST Council.
The issue was discussed in the 45th (September 2021) and 47th(June 2022) meetings of the GST Council; but no decision could be taken.