GST will raise the math of fertilizer companies, anticipation of increasing price
Inversion of taxes in the commodity and service tax (GST) can lead to further injury on the margin of fertilizer companies. At this time there is 6 percent fee on the sale of fertilizer, including 1 percent product fee. In addition, 6 percent of the denominated tax (VAT) is also volatile by the State Government. The input of the fee is tax credit.
But the GST system will take a total of 12 percent tax on the finished fertilizer. 6 percent of the companies will not be compensated. If you have to replenish it, the subsidies have to rejoice. Companies have to put this burden on consumers if the government does not do so and for this they will increase the maximum retail price (MRP) of fertilizers. If this happened, the prices of urea, dyammonium phosphate (other products including DAP and Nitrogen, Potassium and Phosphorus) may increase by 6 to 11 percent and 8.10 percent.
Tell you, Finance Minister Arun Jaitley has denied the possibility of over-range credits, which directly means that more input credits will not be given over the fixed limits. Lihaja fertilizer will increase pressure and on companies.
