The demand to fix the IDS in the fertiliser sector has actually been a
The fertilizer market prepares to make a representation to both the Centre and state financing ministers to look for clearness on the inverted responsibility structure (IDS) that continues the sector and is most likely to continue even if GST rates are rationalized.
The inverted responsibility structure of the fertilizer market will continue to be an obstacle and stress the working capital even if the input and output rates are lined up at 5 percent due to the fact that the output responsibility is paid on a subsidised worth of fertilizers, market executives informed businesslineAs a market, we prepare to look for more clearness and unique dispensation around refunds to attend to the concern, even if rates are reduced,” the executive stated.
At present, fertilizers produced by business bring in output GST at the rate of 5 percent. The crucial inputs required for the manufacture of fertilizers, consisting of Ammonia and Sulphuric acid, bring in 18 percent GST. While the proposition to make input and output GST rate consistent addresses the IDS problem partially, the sector furthermore deals with an obstacle of inversion on account of subsidised rates, based on market sources.
The output GST is remitted on the subsidised worth, which is lower than the real expense of production. As an outcome, the output tax liability is synthetically low, leading to the continued build-up of ITC for producers. “Some state tax authorities do not use refunds on this, and there is no clear choice on a few of the lawsuits. More clearness is required around the IDS structure and associated refunds,” the CEO of a fertilizer business stated.
The demand to remedy the IDS in the fertiliser sector has actually been a long-pending need of the sector and it intends to discover a resolution for it in the upcoming round of GST reforms suggested by the Centre.
Released on August 19, 2025
