Lok Sabha Question No. 974 (UNSTARRED), answered on 2025-12-05
Subject: Impact of GST Rates on Chemical Industries
Ministry: CHEMICALS AND FERTILIZERS
Asked by: Shri Konda Vishweshwar Reddy

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

## LOK SABHA

## UNSTARRED QUESTION NO. 974 TO BE ANSWERED ON : 05.12.2025 Impact of GST rates on Chemical Industries

## 974. SHRI KONDA VISHWESHWAR REDDY:

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

- (a) whether the Government has undertaken any assessment regarding the impact  of  GST  rate  rationalisation  on  the  production,  pricing,  and availability of fertilizers, pharmaceutical products and industrial chemicals in the country, if so, the details of such assessment, sectorwise;
- (b) whether GST changes have increased/reduced the cost of raw materials and inputs used in fertilizers and pharmaceutical manufacturing, if so, the details thereof;
- (c) whether any representations have been received from industry stakeholders, fertilizer manufacturers, pharmaceutical associations and from State Governments regarding adverse impact of GST rationalisation;
- (d) if  so,  the  details  thereof  and  the  action  taken  by  the  Government  to address such concerns, State-wise including Telangana; and
- (e) whether the Government proposes to review GST rates on key inputs used in fertilizers and medicines to ensure price stability and uninterrupted supply to farmers and patients?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF CHEMICALS AND FERTILIZERS (SMT. ANUPRIYA PATEL)

- (a) &  (b): The  Government,  in  consultation  with  the  GST  Council,  undertake periodic assessments on the impact of GST rate rationalisation on key sectors

including  fertilizers,  pharmaceutical  products  and  industrial  chemicals. Accordingly, 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. Pharmaceutical products:

- a.  GST rates on most medicines has been reduced to 5%.

## iii. Industrial Chemicals:

- a. GST rate on natural menthol and goods derived from natural menthol (such as menthol crystals, peppermint / menthe oil, fractionated or deterpenated menthe oil (DTMO), de-mentholised oil (DMO), spearmint oil and Mentha piperita oil) has been reduced from 12% to 5%
- b.  GST rate on synthetic menthol has been increased from 12% to 18%.
- c.  GST rate on crude glycerine has been reduced from 18% to 5%.

Lowering GST rates from 18% to 5% on critical raw materials / inputs reduces the working-capital 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.

GST rates on most medicines has been reduced to 5%. Accordingly, National Pharmaceutical Pricing Authority (NPPA) issued OMs dated 12.09.2025 and

13.09.2025,  directing  pharmaceutical  companies  to  reduce  maximum  retail  price (MRP) on account of reduction in GST rates to pass on the benefit of reduced taxes to consumers.

The Government has reduced the GST rate from 12% to 5% on natural menthol and  goods  derived  from  natural  menthol  (such  as  menthol  crystals,  peppermint  / menthe  oil,  fractionated  or  de-terpenated  menthe  oil  (DTMO),  de-mentholised  oil (DMO), spearmint oil and Mentha piperita oil) to support domestic manufacturers of these products. Additionally, the GST rate on synthetic menthol has been increased from 12% to 18%. Further, to support domestic manufacturers, the GST rate on crude glycerine has been reduced from 18% to 5%.

(c) & (d) : No representation regarding adverse impact of GST rationalisation has been received from fertilizer industry, pharmaceutical industry or chemical industry.

(e): GST rates are determined on the recommendation of the GST Council. The Government continuously reviews the rate structure and any proposal for modification is examined based on industry feedback, States' recommendations and the need to ensure price stability and uninterrupted supply to farmers and patients.

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