Impacts of GST on Chemicals and fertilizers Industries
On June 30, 2017, the scenario of India had been changed. Everyone was just sitting in front of their television set to keep the track on GST. When the Goods and Service Tax (GST) was announced by PM Narendra Modi and President Pranab Mukherjee, there was a positive change in the chemical and fertilizer sectors.
India is ready to buckle up for a significant transformation in the infrastructure. GST is regarded as the ideal persuasive tax reform in India. This is the most significant step taken by the Government of India.
What do you mean by GST?
GST is designed to become a hardheaded alteration in the tax, which aimed to simplify the difficulty of the existing tax system. This in turn results in lowering down the production cost of goods and services. GST is defined as a tax that is accountable for input credit tax liability. The liability can be charged and assessed at each step of the transaction.
The buyer can easily sell the chemical after the first transaction. According to the existing tax system, the rate has to be added to the tax paid by customer. Whereas, in GST the second buyer can easily claims the input tax as a credit to the resale transaction tax.
Role of farmers
In our country, because of the farmers we are able to eat enough. They add up to the benefit of INR 1261 crores as per GST regime. According to the new law, the MRP will reduce to INR 5909/Ton when compared to existing laws.
Food items like rice, sugar, wheat, salt. Flour and wheat are totally exempted from CENVAT. Cereals and grains are also taxed at the rate of 4% under VAT. There are lots of the licensing process and number of indirect taxes applied on agricultural products. There are certain exemptions present from state VAT for food products like eggs, fruits, vegetables and meat.
How GST has an impact on the agriculture and chemical sector?
The GST is a vital step in order to improve the reliability, timeline and transparency of supply chain mechanism. This is ideal for ensuring the total reduction in wastage and overall cost for the farmers or chemical retailers. Additionally, it also helpful in reducing the price of heavy machinery meant for making agricultural and chemical products.
Thus, the overall application of GST looks positive, especially for agricultural and chemical industry. The tax has shown a tremendous rise in the production cost of vital chemicals, resulting in a price-hike of the end product. The latest introduced GST is trusted to become the unbarred progress of chemical and fertilizers industry.
Because of the increase in the inflation index, there is anticipated rise in the cost of agricultural and chemical products. Due to the GST implementation, there is going to be lots of benefits to farmers and chemical distributions. If we talk about the future, GST emerges out as a promising aspect and serves the industries with long term interest. The long sighted vision of PM Modi has increased the chances of economic growth.