GST rates on agrochemicals must be maintained at 18% to avoid inverted duty structure: CCFI
08 February 2023, New Delhi: Crop Care Federation of India (CCFI) while appreciating the proposed changes in the budget has reiterated that the present GST of 18% on pesticides should be maintained as all the raw material, packing material, containers, plant & machinery levy GST of 18%.
Mr. Deepak Shah, Chairman of CCFI said, “Any reduction would result in an inverted duty structure which would be detrimental to indigenous manufacturers and formulators who have the capability of manufacturing quality pesticides rather than depend on imports.”
In a communication sent to Mr. Vivek Joshi, Chairman of Central Board of Indirect Taxes & Customs by Mr. Harish Mehta, Senior Advisor, CCFI mentions, “90% of the final products and services like security, safety, laboratory consumables, advertisement, and publicity material are all charged at 18%.”
Mr. Mehta further mentioned, “The aim is to provide a balancing and seamless flow of credit and its utilization. It also avoids distortion due to inverted duty structure and problems related to the adjustment of credit balance. It has been observed in the past that any taxation relief once given remains unchanged, resulting in continuous loss of revenue linked with growth in the industry, with the surge in imports touching ₹13,369 crores during 2021-22 and likely to cross ₹15,000 crores during the current fiscal. The importers would have a distinct advantage against indigenous manufacturers and go against the policy of ‘Make in India’. The MSME sector would be seriously affected impacting their operations.
Any reduction would result in a loss of revenue estimated annually at ₹4,500 crores besides blocking capital which would increase the cost of business.
“At CCFI we work towards policy favoring farming community where our members can provide better quality than their imported counterparts at 30-75% lower cost and save valuable foreign exchange. It is also to be ensured by the government that the benefits of reduction in GST rates are passed on to the farmers by company and trade channel partners as normally the sales are made inclusive of tax component. In that case, the cost reduction if at all becomes infructuous. We strongly recommend that there should not be any change in GST rates for pesticides manufactured in India” said Mr. Mehta.
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