Fall in fertilizer prices after GST rollout? Not really

In reality, the difference between pre-GST and post GST prices is a paltry 1 per cent

SAMBALPUR: Claims by the Centre that fertilizer prices have come down after GST implementation have no basis so far, a study of the price situation in regional markets shows. The government’s claim last week was that the tax load on fertilizers will come down from 12 per cent to five per cent.
In reality, farmers never paid a 12 per cent tax on fertilizers. “An increase in tax rate had been planned but not implemented,” market sources told Orissa Post.
OP splFarmers say they see no noticeable difference in the prices that existed before July 1, when the Goods and Services Tax regime was rolled out, and what are the running rates now. In fact, the maximum tax load on fertilizers was 6 per cent, comprising a 5 per cent VAT and one per cent excise—making a 1 per cent difference for buyers.
“The 12 per cent tax proposal was in the final stage but not implemented. The price tags on packets had been changed to 12 per cent but they had not come to markets. In the meantime, GST came in. People until now paid altogether six per cent tax on fertilizers,” said Ashok Pradhan, convener of the Western Orissa farmers’ organisation coordination committee.
paintIn the local markets, the cost of Neem-coated urea, the most-commonly used fertilizer and the most subsidized one, has come down from `298 per bag (50 kg) pre-GST to `295 now — a drop of 1 per cent. This is contrary to the Centre’s claim of a 7 per cent drop in price. Similarly, complex fertilizers like DAP which sold `1118 per bag before the landmark tax reform kicked in, are now sold at Rs1106 per bag by dealers and retailers.
In May 2016, the GST Council had fixed a 12 per cent rate on fertilizers, up from the current 4—8 per cent rates, depending on the state it is sold. For urea, the prices were to go up by `300 to `400 per tonne. For fertilizers such as diammonium phosphate (DAP), the hike in retail prices could have been much more. However, the GST Council under pressure from farmer lobbies and other stake-holders, brought it down to a uniform 5 per cent.
But the proposed 12 per cent tax is nowhere to be seen. The tax people paid here was 6 per cent. Thus, the claim by the government that farmers would have to pay less for their cyclical quotas of fertilizers does not make any sense, aver farmer leaders.

Sisir Mishra, OP

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