This circular provides clarification on the applicable GST rate on fertilizers, such as Muriate of Potash (MOP), supplied for use in the manufacture of other fertilizers, particularly complex fertilizers.

The circular explains that Chapter 31 of the Customs Tariff covers fertilizers, which are generally used either directly to increase soil fertility or as inputs for manufacturing complex fertilizers. It notes that even in the pre-GST regime, concessional duty was available not only for fertilizers used directly in agriculture but also for those used in the manufacture of other fertilizers.

Under the GST regime, a similar tax structure has been retained. Fertilizers falling under tariff headings 3102, 3103, 3104 and 3105 attract GST at the concessional rate of 5%, provided they are meant to be used as fertilizers. Fertilizer products under these headings that are clearly not intended for use as fertilizers attract GST at 18%. The circular clarifies that fertilizers used as inputs for manufacturing complex fertilizers, which are ultimately used as soil or crop fertilizers, should not be treated as goods “clearly not to be used as fertilizers”.

Accordingly, it is clarified that fertilizers supplied either for direct use in agriculture or for use in the manufacture of other complex fertilizers for agricultural purposes will be liable to GST at the concessional rate of 5%.