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GST Council Refers to Reduce GST on Fertilisers, Market Sees Profit Booking In The Sector

25 June 20244 mins read by Angel One
The GST Council has referred the request to reduce the GST on fertilizers to the Group of ministers(GoM) on rate rationalization for further consideration.
GST Council Refers to Reduce GST on Fertilisers, Market Sees Profit Booking In The Sector
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The GST Council has referred the request to reduce GST on fertilizers to a group of ministries for further evaluation. This move has led to a decline in fertilizer stocks in the Indian market, affecting companies such as GNSC, FACT, and Chambal Fertilizers. Investors are reacting to the uncertainty surrounding potential tax changes in the sector.

GST Council to reduce GST on Fertilizers 

The GST Council has referred the proposal to reduce GST on fertilizers to a group of ministers for further evaluation, amid broader discussions on rationalizing tax rates. Currently, fertilizers are taxed at 5%, but raw materials like sulfur and ammonia face an 18% rate. This decision follows discussions on recommendations made by the Standing Committee on Chemicals and Fertilisers in February. The aim is to reduce GST on nutrients and raw materials, benefiting fertilizer manufacturing companies and farmers.

The Fertilizer Sector sees Profit-Booking

Despite the announcement of GST reduction for fertilizers, fertilizer stocks opened lower today, possibly due to a previous strong rally in the sector during the previous week. This decline can be attributed to profit booking in fertilizer stocks, such as Chambal Fertilizers and GNFC. FACT and others are trading lower today.

 

Stock Name Current Market Price % Down
GNFC Rs.690 -3.45%
Chambal Fertilisers  Rs.510.75 -1.1%
FACT Rs.1055.65 -7%
Coromandel International Rs.1517.45 -2.09%
Deepak Fertilizers Rs.675.50 -1.60%

 

Conclusion: The GST council’s referral of a recommendation to exempt the fertilizer sector from the current 5 percent GST to the Group of Ministers on rate rationalization indicates a potential relief for both fertilizer manufacturers and farmers. However, despite this positive news, fertilizer stocks opened lower today, likely influenced by a previous rally and profit booking in the sector. This situation highlights the volatility and dynamics within the fertilizer market, where investors and stakeholders navigate regulatory changes and market sentiments.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.

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