Lok Sabha Question No. 82 (STARRED), answered on 2025-12-05
Subject: Impact of GST Structure on Fertilizers and Agricultural Inputs
Ministry: CHEMICALS AND FERTILIZERS
Asked by: Shri Bunty Vivek Sahu, Shri Mukeshkumar Chandrakaant Dalal

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS AND FERTILIZERS DEPARTMENT OF FERTILIZERS

## LOK SABHA

STARRED QUESTION NO. 82* TO BE ANSWERED ON

: 05.12.2025

Impact of GST Structure on Fertilizers and Agricultural Inputs

## 82*. SHRI BUNTY VIVEK SAHU: SHRI MUKESHKUMAR CHANDRAKAANT DALAL:

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

- (a) the details of the changes made under the Goods and Services Tax (GST) structure applicable to fertilizers and other agricultural inputs along with the objectives behind such changes;
- (b) the manner in which the said changes are likely to make the fertilizer sectors more transparent, cost-effective and farmer-friendly;
- (c) whether any assessment has been undertaken by the Government to evaluate the  likely  impact  of  these  changes  on  production  costs,  efficacy  of  supply  chain, availability  and  pricing  of  fertilizers  for  small  and  marginal  farmers  in  the  country, State/district-wise including Bulandshahr, Uttar Pradesh, Palghat in Maharashtra and Dahod Lok Sabha Constituency in Gujarat, if so, the details thereof; and
- (d) the expected outcomes of these reforms in terms of improving affordability, stability in prices of fertilizers, timely availability of fertilizers  and  promoting sustainable agricultural practices, State/district-wise specially in the State of Chhattisgarh, Bihar and Chhindwara district in Madhya Pradesh?

## ANSWER

## THE MINISTER FOR CHEMICALS & FERTILIZERS (SHRI JAGAT PRAKASH NADDA)

- (a) to (d): A statement is laid on the table of the House.

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STATEMENT  REFERRED  TO  LOK  SABHA  STARRED  QUESTION  NO  82*  FOR 05.12.2025  REGARDING  'IMPACT  OF  GST  STRUCTURE  ON  FERTILIZERS  AND AGRICULTURAL  INPUTS'  TABLED  BY SHRI BUNTY  VIVEK SAHU  & SHRI MUKESHKUMAR CHANDRAKAANT DALAL

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(a) to (d): The Government has rationalized Goods and Services Tax (GST) rates applicable on  fertilizers  and  agricultural  inputs  with  effect  from  22.09.2025.  The  details  of  changes made are as under:

## i. Fertilizer sector:

- a.  GST on fertilizer raw materials/inputs such as Sulphuric Acid, Nitric Acid and Ammonia has been reduced from 18% to 5%.
- b.   GST on Micronutrients has been reduced from 12% to 5%.
- ii. Other Agricultural inputs:
- a. Bio-Pesticides: GST on bio-pesticides has been reduced from 12% to 5%.
- b. Agricultural  Machinery  and  Equipments: GST  rate  on  tractors  and  other agricultural machinery & equipments has been reduced from 18% / 12% to 5%.

Lowering GST rates from 18% to 5% on critical raw materials / inputs reduces the workingcapital requirement, lowers the accumulation of Input Tax Credit (ITC) and improves cash flows,  which will encourage more domestic production and support smooth availability of fertilizers to the farmers. The reduction in GST on micronutrient fertilizers from 12% to 5% also provides measurable financial relief to farmers by lowering their per-acre cultivation costs,  improves  affordability,  particularly  for  small  and  marginal  farmers  who  are  often sensitive to input price fluctuations. Lower input costs make it financially viable for farmers to adopt recommended micronutrient doses. As per Indian Micro-Fertilizers Manufacturers Association, due to reduction of GST from 12% to 5%, savings would be of Rs. 140 per acre in Paddy, Rs. 199 per acre in Sugarcane, Rs. 446 per acre in Potato and Rs. 146 per acre in Wheat to farmers.

The  reduction  of  GST  on  bio-pesticides  from  12%  to  5%  is  a  progressive  and environmentally conscious policy intervention to generate a significant positive impact on sustainable agriculture and eco-friendly crop protection practices in India. The reduction in GST  would  make  bio-pesticides  more  economical  and  accessible  to  farmers,  thereby encouraging their greater use as a pocket-friendly crop protection solution. Lower input costs would promote wider adoption of Integrated Pest Management (IPM) practices, wherein bio-

-3- pesticides play a central role in reducing pest resistance and maintaining ecological balance. Competitive prices would support gradual shift from synthetic chemical pesticides towards safer biological alternatives. The tax relief directly supports the government's initiatives on organic  and  natural  farming  aligning  with  the  vision  of  sustainable  and  residue-free agriculture. The reduction of GST from 12% to 5% on mechanical sprayers, sprinklers, drip irrigation systems, and nozzles is a welcome step towards promoting precision agriculture. This reform would make plant protection and irrigation equipment more affordable, thereby encouraging farmers to adopt scientific spraying practices and efficient pesticide application technologies. The resulting improvement in spray efficiency is expected to reduce wastage, minimize  environmental  contamination,  and  enhance  the  overall  effectiveness  of  crop protection measures.

The reduction in GST resulted in lowering the purchase cost of tractors, power tillers, harvesters, threshers, and other essential farm machinery and equipments, making them more  affordable  and  accessible  to  farmers.  When  combined  with  the  financial  support available under farm mechanization schemes, which provides subsidies up to 40-50 percent for purchase of agricultural machines, farmers would enjoy the dual advantage of reduction in taxation and financial assistance. This not only eases the financial burden on individual farmers  but  would  also  encourage  farmer  groups,  cooperatives,  and  Farmer  Producer Organizations  (FPOs)  to  establish  more  number  of  Custom  Hiring  Centres  and  Farm Machinery Banks at lower project costs. This proactive step would accelerate the pace of mechanization  and  contribute  meaningfully  to  achieving  the  goals  of  inclusive  and sustainable  agricultural  development.  This  move  would  also  provide  a  major  boost  to indigenous  agricultural  machinery  manufacturers,  in  line  with  the  vision  of  'Atmanirbhar Bharat' by improving the competitiveness of domestic manufacturers. The reduction of the GST rate on tractors and other agricultural machinery from 12-18% to 5% will lead to a reduction in the prices of Tractors and farm machinery by 7-13%.

Since, GST is applicable uniformly throughout the country, above outcomes would also  be  effective  across  the  country  and  would  be  applicable  to  all  farmers  equally irrespective of them being small or marginal farmers. These reforms would help in improving affordability, stability in prices of fertilizers timely availability of fertilizers & other agricultural inputs and promote sustainable agricultural practices.

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