Budget Expectations 2026: Fertiliser Makers Seek Uniform 5% GST, Faster Refunds

Ahead of the Union Budget 2026, the Indian Micro-Fertilizers Manufacturers Association has called for extending the 5% Goods and Services Tax (GST) across all fertilisers notified under the Fertiliser Control Order (FCO), PTI reported. The industry body has also urged the government to expedite refunds of excess GST credits and implement a unified licensing system.

In last year’s Union Budget, the Centre allocated ₹1.68 lakh crore towards fertiliser subsidies. The allocation is expected to be higher in FY27 amid rising global prices of raw materials, according to reports.

The association said manufacturers are facing an inverted duty structure, where raw materials and services attract higher GST rates than the finished products. While acknowledging that GST 2.0 was a landmark reform for the sector, the body noted that tax on Schedule 1G items and their mixtures was reduced to 5% from 12% under the reform.

“This results in the accumulation of excess input tax credit, locking up working capital for manufacturers,” PTI reported, citing Rahul Mirchandani, president of the association and chairman of Aries Agro Limited.

The association has proposed a clear and time-bound mechanism for quicker refunds of excess GST credits, particularly for sectors operating under price-sensitive and regulated regimes such as fertilisers. “Faster refunds will directly ease working capital stress and enable manufacturers to invest more in quality, capacity and farmer outreach,” Mirchandani said.

It has also pressed for the uniform application of the 5% GST rate across all fertilisers notified under the FCO. “A common GST rate will ensure a level playing field, prevent classification disputes, and promote innovation without tax distortions,” Mirchandani said in a statement issued on Sunday.

In addition, the association, along with agricultural experts, has urged the implementation of ‘One Nation, One License’ to improve ease of doing business. It has proposed the creation of a centralised digital repository for all licence-related documents, accessible to state governments, to enable seamless verification and faster issuance of marketing permissions.