Lok Sabha Question No. 645 (UNSTARRED), answered on 2022-02-04
Subject: Tax on Chemical Fertilizers
Ministry: CHEMICALS AND FERTILIZERS
Asked by: Omprakash Bhupalsinh alias Pawan Rajenimbalkar

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS DEPARTMENT OF FERTILIZERS LOK SABHA

UNSTARRED QUESTION NO. 645+ TO BE ANSWERED ON: 04.02.2022

## Tax on Chemical Fertilizers

## +645. SHRI OMPRAKASH BHUPALSINH alias PAWAN RAJENIMBALKAR:

Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:

- (a) the details of chemical fertilizers imported by the Government in the year 2020-21;
- (c) whether the rates of fertilizers have increased owing to this and if so, the details thereof;
- (b) whether the import tax on chemical fertilizers has been increased by the Government and if so, the details thereof;
- if not; the reasons for the increase in the rates of fertilizers; and { the further   steps taken by the Government to control the   prices of fertilizers?

## ANSWER

MINISTER OF HEALTH & FAMILY WELFAREAND CHEMICALS & FERTILIZERS

## DR MANSUKH MANDAVIYA)

- (a): Import of urea for direct agriculture use is made on Government account through State Trading Enterprises (STEs) under the Foreign Trade Policy of the Government: During the year 2020-21, 98.28 LMT of urea has been imported on Government account:

Further, all P&K fertilizers are covered under Open General License (OGL) under the Nutrient Based  Subsidy (NBS) Scheme. are imported by the companies on commercially viable terms Quantity of DAP , MOP and NPK fertilizers imported in the country during 2020-21 is given in the table below: They

| Import of fertilizers (DAP , MOP and NPK) during 2020-21 Qty in LMT   | Import of fertilizers (DAP , MOP and NPK) during 2020-21 Qty in LMT   | Import of fertilizers (DAP , MOP and NPK) during 2020-21 Qty in LMT   | Import of fertilizers (DAP , MOP and NPK) during 2020-21 Qty in LMT   |
|-----------------------------------------------------------------------|-----------------------------------------------------------------------|-----------------------------------------------------------------------|-----------------------------------------------------------------------|
| Year                                                                  | DAP                                                                   | MOP                                                                   | NPK                                                                   |
|                                                                       | As reported by the companies                                          | As reported by the companies                                          | As reported by the companies                                          |
| 2020-21                                                               | 48.82                                                                 | 42.27                                                                 | 13.90                                                                 |

- (b): No.

- (c): No.

(d) to (e): The MRP of Urea is statutorily notified by the Government which is Rs. per bag  (exclusive of  charges towards neem   coating and taxes as applicable) with effect from Ist March, 2018.

Since then there has been no increase in the MRP of Urea.

There has been an increasing price trend of the raw materials and finished P&k fertilizers in the international market

However, in the wake of the volatility in prices in the international markets, Gol has analyzed the situation and the prices under NBS subsidy for 2021-22 were notified twice on 20.05.2021 and on 13.10.2021 in order to control the prices of fertilizers. The subsidy rates during FY 2021-22 is as under:

From 01.04.2021 to 19.05.2021

| S. No:   | Nutrients   |   NBS (Rs. Per Kg of Nutrient |
|----------|-------------|-------------------------------|
| 1        | N           |                        18.789 |
| 2        | P           |                        14.888 |
| 3,       | K           |                        10.116 |
|          | S           |                         2.374 |

|    | Nutrients   |   NBS (Rs_Per Kg of Nutrient |
|----|-------------|------------------------------|
| 1_ | N           |                       18.789 |
| 2. | P           |                       45.323 |
| 3  | K           |                       10.116 |
| 4. | S           |                        2.374 |

## From 20.05.2021 to 30.09.2021

|    | Nutrients   | NBS (Rs_   |
|----|-------------|------------|
| 1_ | N           | 18.789     |
| 2  | P           | 45.323     |
| 3. | K           |            |
| 4  | S           | 2.374      |

## fertillizers\_applicable from 01.10.2021t0 3103.2022 Were:

|   S. No_ | Name of Fertilizers   |   Additional   subsidy over and above thel NBS rates  fixed for the same Rs_IMT) |
|----------|-----------------------|----------------------------------------------------------------------------------|
|        1 | DAP 18-46-0-0         |                                                                             8769 |
|        2 | NPK 20-20-0-13        |                                                                             2000 |
|        3 | NPK 10-26-26-0        |                                                                             2000 |
|        4 | NPK 12-32-16          |                                                                             2000 |

This subsidy increase on P&K fertilizer under NBS scheme helped in making P&K fertilizers available at affordable prices to farming community:

The latest notified subsidy rates under NBS scheme is placed at Annexure 'A'.

To ensure that the P&K fertilizers are made available at reasonable price to farmers , Gol has also issued reasonableness guidelines to check the reasonableness of MRP of P&K fertilizers. A copy is placed at Annexure 'B'.

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## No. 23011/1/2021-P&K Government of India

## Department of Fertilizers

## QFFICE MEMORANDUM

Subject: Nutrient Based Subsidy (NBS) rates for Phosphatic and Potassic (P&K) fertilizers , onetime special package for DAP and 3 most consumed NPK grades for Rabi 2021-22 (from 1st October, 2021 upto March; 2022) and inclusion of Potash Derived from Molasses (PDM) (0:0:14.5:0) under NBS Scheme. 31st

The undersigned is directed to refer to OM of even no\_ dated 20.5.2021 on the subject mentioned above and to convey that per Kg subsidy on nutrients, namely Nitrogen (N), Phosphate (P) , Potash (K) and Sulphur (S) contained in P&K fertilizers covered under the NBS Policy for the year 2021-22, applicable w.e.f. 01.10.2021t0 31.03.2022, shall be as under:

|   S.No | Nutrients   | NBS (Rs. Per Kg of Nutrient)   |
|--------|-------------|--------------------------------|
|      1 | N           | 18.789                         |
|      2 | P           | 45.323                         |
|      3 | K           |                                |
|      4 | S           | 2.374                          |

- It is also to state that Potash Derived from Molasses (PDM) (0.0.14.5.0) has been included under the NBS Scheme, as 25"hgrade of P&K Fertilizers.
- Product-wise subsidy on various grades of P&K fertilizers covered under FCO and NBS Scheme for 2021-22,applicable from 01.10.2021 to 31.03.2022, shall be as under -

| S No.   | Name of Fertilizers   |   NBS Rates(in Rs. MT) |
|---------|-----------------------|------------------------|
| 1       | DAP 18-46-0-0         |                  24231 |
| 2       | MOP 0-0-60-0          |                   6070 |
| 3       | SSP 0-16-0-11         |                   7513 |
| 4       | NPS 20-20-0-13        |                  13131 |
| 5       | NPK 10-26-26-0        |                  16293 |
|         | NP 20-20-0-0          |                  12822 |
|         | NPK 15-15-15          |                  11134 |
| 8       | NP 24-24-0-0          |                  15387 |
| 9       | AS20.5-0-0-23         |                   4398 |
| 10      | NP 28-28-0-0          |                  17951 |
| 11      | NPK 17-17-17          |                  12619 |
| 12      | NPK 19-19-19          |                  14103 |
| 13      | NPK 16-16-16-0        |                  11876 |
| 14      | NPS 16-20-0-13        |                  12379 |
| 15      | NPK 14-35-14          |                  19910 |
| 16      | NPS 24.24-0-8*        |                  15387 |

ShastriBhawan; New Delhi: Dated 13thOctober; 2021.

<!-- image -->

|   17 | MAP 11-52-0-0    |   25635 |
|------|------------------|---------|
|   18 | TSP 0-46-0-0_    |   20849 |
|   19 |                  |   18377 |
|   20 | NPK 14-28-14     |   16737 |
|   21 | NPKS 15-15-15-09 |   11348 |
|   22 | NP 14-28-0-0     |   15321 |
|   23 | NPK 8-21-21      |   13145 |
|   24 | NPK 9-24-24      |   14996 |
|   25 | PDM (0.0.14.5.0  |    1467 |

- 4 variant of the subsidized P&K fertilizers covered under NBS Scheme and are fortifiedl coated with Boron and Zinc, as provided for under FCO, will continue to be eligible for subsidy. Such fortified/ coated grades of fertilizers will attract an additional per MT subsidy to encourage their application along with primary nutrients as per the rates mentioned below: Any
- Special onetime package with an additional subsidy for the following P&K fertilizers, applicable from 01.10.2021 to 31.03.2022, shall be as under:
- 6, In order to examine the reasonableness of MRPs of P&K fertilizers, the fertilizer companies will continue to submit the certified cost data as per the extant guidelines of reasonableness of MRP of P&K fertilizers. The fertilizer companies will also report MRP of P&K fertilizers regularly to DOF. The profit earned above the reasonable will be treated as unreasonable and will be recovered from the subsidy bills of such companies. profit
- 7 The P&K fertilizer companies will ensure that the MRP of various grades of P&K fertilizers be maintained in accordance with the subsidy rates as notified and sell through their retailers accordingly.

|    | S.No Nutrients for fortification Additional subsidy for Icoated  fertilizers over and above thel frates indicated in para 3 above (Rs/MT)   |   S.No Nutrients for fortification Additional subsidy for Icoated  fertilizers over and above thel frates indicated in para 3 above (Rs/MT) |
|----|---------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|    | Boron (B}                                                                                                                                   |                                                                                                                                         300 |
| 2  | Zinc (Zn)                                                                                                                                   |                                                                                                                                         500 |

| S: No.   | Name of Fertilizers   |   Additional Subsidy over and above the rates indicated in para 3 above (in Rsl MT) |
|----------|-----------------------|-------------------------------------------------------------------------------------|
|          | DAP 18-46-0-0         |                                                                                8769 |
| 2        | NPS 20-20-0-13        |                                                                                2000 |
| 3        | NPK 10-26-26-0        |                                                                                2000 |
|          | NPK 12-32-16          |                                                                                2000 |

- The fertilizer companies are required to print Maximum Retail Price (MRP) along with applicable subsidy on the fertilizer bags clearly: sale above the printed MRP will be punishable under the EC Act Any
9. The distribution and movement of fertilizers along with import of finished fertilizers, fertilizer inputs and production by indigenous units will continue to be monitored through the online web based "Integrated Fertilizer Monitoring System (FMS)" .
10. Manufacturers/Marketers/lmporters of P&K fertilizers, including manufacturers of SSP, are required to ensure that fertilizers are transported up to the retail point on Freight on Road (F.O.R,) delivery basis.
11. There would be no separate subsidy on sale of customized fertilizers and mixture fertilizers.
12. The payment of subsidy to the manufacturerslimporters of P&K fertilizers shall be released as per the\_procedure and terms and conditions mentioned in the Department Notification No. D(FAY CCEA2011 dated 25.10.2012 and dated 17.03.2017, as amended from time to time.
- 13, This issues with the approval of the Competent Authority.
- 14, Hindi version will follow.

## To,

SdlDr: Tina Soni)

Director Tel: 23386398

- 2 Secretary (Expenditure) , Department of Expenditure; North Block; New Delhi.
- 1 Secretary (Agriculture), DA&FW; Krishi Bhawan; New Delhi:
3. Secretary (NITI Aayog) , Yojana Bhawan, New Delhi:
5. Joint Secretary (Cabinet) , Cabinet Secretariat; Rashtrapati Bhawan; New Delhi:
- 6 Joint Secretary (INM) , DA&FW, Krishi Bhawan; New Delhi.
- 7 .
8. Joint Secretary (NA), Department of Fertilizers, New Delhi.
10. Executive Director; FICC , Department of Fertilizers, New Delhi.
- 9\_ Joint Secretary (AS) , Department of Fertilizers, New Delhi:
- 11.Chief Controller of Accounts, Department of Fertilizers; New Delhi.
- 13.Director (Finance)/Director (Budget) , Department of Fertilizers, New Delhi.
12. Director (P&K), Department of Fertilizers , New Delhi.
- 14.DS, PMO, South Block, New Delhi
- 15.Jt Director (Movement) , Department of Fertilizers, New Delhi.
- 16.Director (Fertilizer Subsidy) , Department of Fertilizers, New Delhi:
- 17.DDG, NIC, Department of Fertilizers- To upload on website and other digital platforms
- 18.Director General, FAI, New Delhi:
- 19.All Urea Marufacturers and P&K Fertilizer Manufacturers& importers.

## Copy to:

1. Chief Secretaries of the State Governments/ UTs:
2. Commissioners/Directors , CommissioneratelDirectorate of   Agriculture of the State Governmentsl Uts.

## also to: Copy

- 1 . PS to Hon'ble Minister (C&F}
2. PS to Hon'ble MOS (C&F)
- 4 . AD (OL) , Hindi Cell, Department of Fertilizers For translation in Hindi
3. PS to Secretary (Fertilizers)
- 5, SO(IT) , Department   of Fertilizerssame on the Department's website.
- 6, Guard File

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## Government of India Ministry of Chemical & Fertilizers Department of Fertilizers

Shastri Bhawan,New Delhi

Dated

15th November, 2019

## OQFFICE MEMORANDUM

Sub: Implementation of the Nutrient Based Subsidy (NBS) policy for Phosphatic and Potassic (PaK) Fertilizers.

In continuation of this Division'$ OM No. 23011/5/2013-MRP dated 03.05.2019 on the subject mentioned, the undersigned is directed to issue the detailed guidelines for evaluation of reasonableness of MRP'$ of PaK fertilizers under the NBS Scheme to be effective from 01.04.2012 as below:

- i. The present format of data collection will continue to be used for collection of cost data from the PGK Companies:
2. The online module for online submission of cost data by the companies will be developed by NIC at the earliest.
- iii. After implementation of the online module of data submission , the Companies will be required to submit the final audited cost data once in a year for the previous financial year by August of every year.
4. iv In case of non-submission of cost data by the companies within the stipulated time, the further subsidy payment of the company will be stopped till the time the company furnishes the requisite cost data to the Department of Fertilizers.
5. V The Department of Fertilizer will complete the process of examination of In case of late submission of the cost data, DoF will complete the reasonable exercise within two months of the   submission of the cost data by the company.
- vi. The profits earned above 12% will be treated as unreasonable profit'
- vii. No deduction of Taxes/ Dividends by the companies will be granted while computing the reasonable profit: paid
- viii. The unreasonable amount of profit i.e: profit over and above reasonable profit will be recovered from the defaulting companies.
9. ix If a company is habitual defaulter of fixing unreasonable MRPs, matter will be placed before IMC to consider taking action against the company which may include levy of penal interest on the recovery, removable of any grade/grades of fertilizers of that company or removal of the fertilizer company itself from the NBS scheme\_
- X. If profit margin of a company for a product is found unreasonable, company will be provided ar; opportunity to represent /furnish inputs to adjustments from the subsidy payments. In doing SO, any onetime factor will also be appropriately considered. In such cases company will be issued notice to represent/furnish comments within 14 FICC will be asked to examine the comments received from the company within 15 days and thereafter final decision to be taken by DoF within 30 days of receipt of company'$ response. If the company doesn't reply within 14 days, it will be presumed that company has nothing to represent and accordingly, the amount over and above the reasonable will be recovered: prior days: profit
- xi. Profit margin will be evaluated for each product /company wise instead of unit wise subject to the condition that the company maintains same MRP for a particular   product   irrespective of the unit in which it is manufactured. However , reasonableness evaluation of indigenous and imported products will be done separately.

xii. Formula for calculating the reasonableness of MRP will be as below: If Net MRP + Subsidy <= 1.12* Cost of sales, profit margin is reasonable: If NetMRP + Subsidy >1.12*Cost of sales, profit margin is unreasonable. Here, Net MRP MRP-Discount-Dealer's Margin and

2. This issues with the approval of Competent Authority.

To,

Director (CE) , FICC, R.K Puram, New Delhi.

XXXXXXX

Tel

Sdl -

(Geeta Mishra) Under Secretary to the Govt; of India

23386151