Classification of Fertilizers Supplied for Manufacturing of Other Fertilizers: Circular No. 54/28/2018-GST
<p><span>The Ministry of Finance issued Circular No. 54/28/2018-GST on 9th August 2018, addressing the classification of fertilizers supplied for use in the manufacture of other fertilizers at the concessional GST rate of 5%. Here are the key highlights:</span></p><p><span><strong>1. Clarification on GST Rate for Fertilizers</strong></span></p><ul><li><span>Simple fertilizers such as Murate of Potash (MOP) classified under Chapter 31 and supplied for use in the manufacturing of complex fertilizers are entitled to the concessional GST rate of 5%.</span></li><li><span>This classification applies as long as the fertilizers are used directly as fertilizers or in the manufacture of other fertilizers.</span></li></ul><p><span><strong>2. Pre-GST Regime Reference</strong></span></p><ul><li><span>In the pre-GST regime, a concessional duty rate was prescribed for fertilizers falling under Chapter 31 of the Customs Tariff Act, 1975.</span></li><li><span>The concessional rate applied to goods used directly as fertilizers or in the manufacturing of complex fertilizers.</span></li></ul><p><span><strong>3. GST Notification and Tax Structure</strong></span></p><ul><li><span>The GST notification and tax structure on fertilizers have been aligned with the pre-GST tax incidence.</span></li><li><span>Fertilizers falling under headings 3102, 3103, 3104, and 3105, which are used as fertilizers, attract a 5% GST rate.</span></li><li><span>Fertilizer items falling under these headings, which are clearly not used as fertilizers, attract an 18% GST rate.</span></li></ul><p><span><strong>4. Intent of Concessional GST Rate</strong></span></p><ul><li><span>The concessional GST rate of 5% is intended for fertilizers used directly as fertilizers or in the manufacturing of complex fertilizers for agricultural use (soil or crop fertilizers).</span></li><li><span>The phrase "other than clearly to be used as fertilizers" does not cover fertilizers used for making complex fertilizers for agricultural use.</span> <a href="https://cms.plasament.com/storage/circular-no54.pdf">circular_no.54</a><br> </li></ul>