Chapter 31 - Complete List of GST Rates and HSN Codes for Fertilisers

• Fertilisers are very important in Indian agriculture for manufacturers, distributors and farmers.
• Knowing the HSN code as per the type of fertiliser helps file appropriate GST returns.
• Fertiliser manufacturers can also claim tax exemptions on zero-rated products and input tax credits.
• The central and state governments promote fertiliser manufacturing by giving subsidies.

India is an agriculture-based economy, which is a major producer and exporter of vegetables, fruits, millet, wheat, rice and spices. For producing these, fertilisers play a crucial role in boosting soil fertility, improving crop yields and meeting the growing demand.India is one of the largest consumers and producers of fertilisers all over the world. It has a highly developed fertiliser industry catering to millions of farmers.By knowing the HSN (harmonised system of nomenclature) codes for fertilisers, you can calculate the amount of GST based on the type of fertiliser you manufacture or buy. Also Read - Find out how to check the status of your GST returns

The table specifies the fertiliser's HSN codes (harmonised system of nomenclature) and also the applicable GST rates -

If you are unsure of the HSN code of any fertiliser, you can find it online on the official GST portal. The process for the same is as follows:

• Step 1 : Visit the official GST portal .
• Step 2 : Click the services tab on the dashboard.
• Step 3: Thereafter, select user services.
• Step 4 : You will land on the HSN search page.
• Step 5 : Download the HSN directory in Excel format.
• Step 6 : Search the HSN code by (i) the HSN chapter code or (ii) Description.
• Step 7 : When searching by HSN code (use the Excel sheet) and enter the appropriate captcha, then search.
• Step 8: Search results would appear under the chapter head showing product description, HSN code, technical description, trade description and other related HSN codes.
• Step 9: When searching the HSN chapter by description, select the goods or services tab, enter the description of goods or services, enter the appropriate captcha, and search.
• Step 10 : Search results would appear under the chapter head showing product description, HSN code, technical description, trade description and other related HSN codes.

You can pay your GST online in some easy steps, which are discussed below:

• Step 1 : Log in to the GST portal .
• Step 2 : Click the services tab on the dashboard.
• Step 3 : Select payments followed by creating a challan.
• Step 4: Enter GSTIN/ Other Id.
• Step 5 : Choose the appropriate tax heads and enter the amount.
• Step 6 : Select a payment mode.
• Step 7 : Make the payment and note the challan reference number (CRN).

Fertiliser manufacturers can claim the following types of tax exemptions: Input Tax Credit (ITC) On the production of raw materials, capital goods and services used by the fertiliser manufacturers are eligible to claim input tax credit (ITC) on the GST paid. Exemption from GST on certain inputs Nutrient-based Subsidy (NBS) scheme : Subsidies provided under the NBS scheme for certain fertilisers are typically adjusted in the price of fertilisers. This benefits both farmers and manufacturers as it reduces the effective cost of production. Exemption on Agricultural Input Products The government provides lower GST rates of 5% for input products based on agriculture. This helps the manufacturers to keep the final price of fertilisers more affordable, which is then used by the farmers more easily. Exemption on exported fertilisers (Zero-rated Export) Zero-rated exports are those exports for which the government provides a full exemption of the GST tax burden. The manufacturers of fertilisers can claim a refund of GST on the inputs used in the production of fertilisers that are exported outside the country. Concessional Customs Duties on Fertiliser Inputs The production of fertilisers that require raw materials imported from other countries gets a concession on customs duties. This makes the manufacturing of fertilisers more cost-effective, thus lowering production costs. Incentives for Green Manufacturing and Sustainability Manufacturers that use environmentally friendly methods for the production of fertilisers may qualify for government schemes aimed at sustainability and promoting the green manufacturing of goods. GST Exemptions on Fertiliser Manufacturing Services Services facilitating the production of fertilisers are also given exemptions or lower tax rates. For instance:-

• Transportation of fertilisers : Exemptions on the transportation facility for fertilisers are provided by some Indian states. This promotes and facilitates availability and reduced final rates of fertilisers throughout the state.
• Packaging services : By using certain packaging methods and materials, manufacturers can have the benefits of reduced GST rates by reducing the cost.

The basic calculation for GST on fertilisers is done as follows:GST = CostofFertiliser × (GSTrate/100)

• The cost of fertiliser is the price at which the fertiliser is being sold (excluding GST)
• The GST Rate is typically 5% for most fertilisers in India.
• The GST amount can be added to the cost of the fertiliser to get the total cost after GST.

For example, thecost of a fertiliser bag (excluding GST) is ₹500, and the GST rate is 5%. Here's how you would calculate the GST:GST= 500 × (5/100) = 500 x 0.05 = ₹25.Total cost = 500 + 25 = ₹525.So, the total cost of the fertiliser after applying 5% GST would be ₹525.

In July 2017, the goods and services tax (GST) was introduced in India, which brought significant changes in the tax structure of various sectors, including the fertiliser industry. Here's what has changed -

• Before the implementation of GST: The prices for fertilisers were influenced by a combination of taxes like VAT (value added tax), central excise duty and customs duty etc. This greatly varied from state to state, making the taxation system complex.
• After the introduction of GST: The prices for fertilisers after the introduction of GST are now greatly standardised and have uniformity in their prices.

Also Read - Find out how to calculate and avoid GST penalties

The fertiliser industry in India plays a vital role in supporting the agricultural economy by ensuring the availability of essential nutrients for crops. The implementation of GST has simplified the taxation structure, providing uniformity in fertiliser prices across the country.Fertilisers are classified through HSN codes and their corresponding GST rates, which helps determine the appropriate tax burden on different types of fertilisers, whether organic, chemical, or nutrient-based.Government schemes such as subsidies on fertilisers, incentives for sustainable practices, and tax exemptions for manufacturers and exporters further contribute to reducing the financial burden on both farmers and manufacturers.Overall, the combination of efficient tax structures, strategic subsidies, and incentives creates a more resilient and cost-effective fertiliser industry.It is also important to know your correct GST liability to file your returns accurately. The GST calculator helps you find this tax liability. Calculate your GST liability using the calculator in a few steps and pay your returns.