GST Council meeting likely to discuss fertilizer sector for growth boost

Ira Singh
Khabar Khabaron Ki,20 June’24

The Goods and Services Tax (GST) Council is set to hold its 53rd GST Council meeting June 22, 2024 in New Delhi.This will be the first meeting of the GST Council in over 8 months. Nirmala Sitharaman, who took charge as the Union Finance Minister on Wednesday, will chair the meeting.The council will address several critical issues, including the taxation of online gaming and the rationalisation of the indirect tax structure, according to information.

Key Highlights:

Online Gaming Taxation:One of the primary topics on the agenda is the taxation framework for the burgeoning online gaming industry. The sector has seen exponential growth in recent years, prompting the need for a clear and fair tax policy. The council’s decision will be crucial for stakeholders, including game developers, operators, and players, as it will determine the financial and regulatory environment of the industry.

According to information,in a sign of potential relief for India’s online gaming industry, the Union Finance Ministry has proposed an amendment to the Central Goods and Services Tax (CGST) Act, 2017 via the introduction of a new Section 11A in the legislation.This proposed section empowers the central government to “not recover the GST not levied or short-levied as a result of general practice.

If accepted, the amendment could pave the way for not recovering 28 per cent GST on e-gaming, casinos and horse racing. Industry players have raised concerns over the ambiguous nature of last years’ decision to levy this rate of GST on the sector.This new provision could offer a safety net by legitimising past practices where GST was not fully applied, thereby preventing retrospective tax demands that could financially cripple e-gaming companies.

Indirect Tax Structure Rationalisation

The council will also discuss potential changes to the existing indirect tax framework. This includes considering adjustments to GST rates and classifications to streamline the tax system, reduce compliance burdens, and enhance revenue collection. Rationalising the tax structure aims to address industry concerns about tax anomalies and improve overall efficiency.

GST Exemption Discussions

Recently, discussions have intensified around the potential removal of the Goods and Services Tax (GST) on fertilizers. While it’s yet to be determined if the exemption will apply across the board, there is considerable optimism about positive developments in this area. The removal of GST is expected to lower costs for farmers, making fertilizers more accessible and promoting higher agricultural output.

Market Rally :Shares of leading fertiliser companies,including National Fertilisers Limited (NFL), Chambal Fertilisers, Rallis India and FACT among others, soared as much as 8-12% in early trading sessions. The rally reflects strong investor sentiment driven by the anticipation of a favourable government decision.

Analysts and industry experts are optimistic about the potential impact of this tax relief. “An exemption from GST would reduce input costs for farmers, making fertilisers more affordable and boosting agricultural productivity,” agricultural economist. “This move could also enhance the profitability of fertiliser manufacturers by increasing demand and reducing compliance costs

Farmers and agricultural organisations have long advocated for tax exemptions on essential inputs like fertilisers, arguing that such measures are crucial for sustaining agricultural growth and ensuring food security.

Fertiliser stocks have hit fresh highs on hopes of a GST exemption, reflecting strong investor optimism and the potential for substantial benefits to the agricultural sector. As the government deliberates on this significant policy decision, stakeholders across the industry are hopeful for a positive outcome that could drive growth and sustainability in the sector.