Reduction of GST on Pesticides from 18% to 5% recommended by CG

1) The Department of Chemical and Petrochemicals has approached the Finance Ministry for reducing GST on pesticides from 18% to 5% with the objective to bring parity in taxation on agro-inputs.

2) Fertilizers that attract 5% of GST, the pesticide is charged 18% GST, even higher than 12% VAT before the introduction of the new indirect tax system. Recently, The Pesticides Manufacturers and Formulators Association of India (PMFAI) demanded that the government should reduce GST to 5% from the current 18% on pesticides in line with other farm inputs like seeds and fertilizers.

The standing committee has recommended the government, “Committee is dismayed to note that GST on pesticides has increased to 18 percent after the rollout of GST from around 12 percent VAT in most of the important states where the pesticides are consumed on a large-scale. GST on fertilizers is only 5 percent and pesticide being another agro-input deserves to be put under 5 percent slab of GST.”

3) The committee in the report said the committee notes the recommendation of the Department of Chemicals and Petrochemicals to bring down the GST slab to 5 per cent. Since it is disheartening to note that crops worth Rs 90,000 crore are lost annually due to pests and diseases, the committee recommended that GST on pesticides should be reduced from 18% to 5% so as to benefit the farmers and to increase agricultural production in the country.

4) The GST reduction will help bring three-fourth of the total farmers in India, who are outside the ambit now, to protect their crops without causing any substantial loss to the central exchequer. This will help farmers harvest crops with minimal loss and secure better returns too.

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