Circular No. 54/28/2018-GST
F. No. 354/255/2018-TRU (Part-2)
Government of India
Ministry of Finance
Department of Revenue
(Tax Research Unit)
North Block, New Delhi
Dated, 9th August, 2018
Principal Chief Commissioners/Principal Directors General,
Chief Commissioners/Directors General,
All under CBIC.
Subject: Classification of fertilizers supplied for use in the manufacture of other fertilizersat 5% GST rate- reg.
References have been received regarding a clarification as to whether simple fertilizers,such as MOP (Murate of Potash) classified under Chapter 31,and supplied for use in manufacturingof a complex fertilizer, are entitled to theconcessional GST rate of 5%, as applicable in general to
fertilizers (i.e. fertilizers which are cleared to be used as fertilizers).
2.1 The matter has been examined. Chapter 31 of the Customs Tariff Act, 1975 coversFertilizers. The fertilizers are mostly used for increasing soil and land fertility, either directly, orby use in manufacturing of complex fertilizers. However, certain fertilizers and similar goodsfalling under this Chapter may be used for individual purposes like use of molten urea formanufacture of melamine and urea used in manufacturing of urea-formaldehyde resins or organicsynthesis.
2.2 In the pre-GST regime, the concessional duty rate was prescribed for fertilizers fallingunder Chapter 31 of the Tariff (notification No. 12/2012-Central Excise). This concessional ratewas applied to goods falling under Chapter 31 which are clearly to be used directly as fertilizersor in the manufacture of other fertilizers, whether directly or through the stageof an intermediate
3. In the GST regime, tax structure on fertilizers has been prescribed on the lines of pre-GSTtax incidence. The wording of the GST notification is similar to the central excise notificationexcept certain changes to meet the requirements of GST. These changes were necessitated as GSTis applicable on the supply of goods while central excise duty was applicable on manufacture ofgoods. Accordingly, fertilizers falling under heading 3102, 3103, 3104 and 3105, other than thosewhich are clearly not to be used as fertilizers, attract 5% GST [S. No. 182A to 182D of the Firstschedule to the notification No.1/2017-Central Tax (Rate) dated 28.06.2017]. However, thefertilizers items falling under the above mentioned headings, which are clearly not to be used as
fertilizer attract 18% GST [S. No. 42 to 45 of the III schedule to the notification No. 1/2017 CentralTax (Rate)]. The intention has been to provide concessional rate of GST to the fertilizers whichare used directly as fertilizers or which are used in the manufacturing of complex fertilizers whichare further used as soil or crop fertilizers. The phrase “other than clearly to be used as fertilizers”
would not cover such fertilizers that are used for making complex fertilizers for use as soil or cropfertilizers.
4. Thus, it is clarified that the fertilizers supplied for direct use as fertilizers, or supplied foruse in the manufacturing of other complex fertilizers for agricultural use (soil or crop fertilizers),will attract 5% IGST.
Dr. Ajay K. Chikara
Technical Officer (TRU)