Agriculture Sector Flags GST Transition Concerns With CBIC

On September 12, 2025, representatives from India’s agriculture and tractor sectors met officials of the Central Board of Indirect Taxes and Customs (CBIC) to address challenges in the implementation of recent GST rate cuts on fertilisers and related products. While the rate reductions aim to lower farm input costs, industry stakeholders raised concerns over accumulated input tax credits (ITC), tax inversion, and uneven execution, which may limit the intended benefits.

Fertiliser Industry Concerns

Rahul Mirchandani, President of the Indian Micro-Fertilisers Manufacturers Association, highlighted that nearly ₹400 crore of accumulated ITC on existing inventory could remain blocked due to the GST changes. “We have flagged it to CBIC. The rate cut does not cover all micronutrients used in fertilisers, so the expected cost reduction may not materialise fully. Moreover, the cut has been implemented for manufacturers, but a similar move for traders and importers is essential to ensure a smooth transition,” Mirchandani told CNBC TV18. CBIC assured the association that relief measures may be introduced by the end of 2025.

Tractor Industry Concerns

The tractor industry also pressed for resolution of long-pending GST issues. Bharat Madan, CFO of Escorts Kubota Ltd and Chairman of the Finance Committee at the Tractor and Mechanisation Association, noted that the sector continues to face tax inversion in certain goods taxed at 18%. He said accumulated credits worth ₹800–900 crore are likely blocked in dealer warehouses. The association requested CBIC’s intervention to prevent dealer-level inventories from being penalised by the timing of the tax cuts. “We have sought relief on the inversion and on accumulated credits due to inventory in stock at dealers,” Madan explained.

CBIC Response

In response, CBIC assured stakeholders that their concerns would be reviewed and hinted that some relief could be announced later this year. Industry leaders emphasised that the timely resolution of these transition issues is essential. Without addressing blocked credits and tax inversion, manufacturers, traders, and dealers could face significant financial stress, undermining the intended benefits of the GST rate rationalisation.

Read More: India And Bhutan Sign MoU on Technical Cooperation in Agriculture and Allied Sectors

Conclusion

The September 12 meeting between industry representatives and CBIC highlighted critical issues in implementing GST rate cuts on fertilisers and tractors. With ₹1,200 crore of credits at risk due to ITC blockage and tax inversion, prompt relief measures are crucial to ensure the policy achieves its goal of reducing input costs for farmers and supporting the broader agricultural and allied sectors.

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