Notification No. 18/2017 – UTTR Explained

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Notification No. 18/2017 - Union Territory Tax (Rate): Seek to reduce the rate of Central Tax, Union Territory Tax, on fertilisers from 6% to 2.5% and Integrated Tax rate on fertilisers from 12% to 5%

GST: [TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (i) OF THE GAZETTE OF INDIA, EXTRAORDINARY]

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 7 of the Union Territory Goods and Services Tax Act, 2017 (14 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No.1/2017-Union Territory Tax (Rate), dated the 28th June, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 710(E), dated the 28th June, 2017, namely:-

In the said notification,-

in Schedule I – 2.5%, after serial number 182 and the entries relating thereto, the following serial numbers and entries shall be inserted, namely:-

(1)	(2)	(3)
“182A	3102	Mineral or chemical fertilisers, nitrogenous, other than those which are clearly not to be used as fertilizers
182B	3103	Mineral or chemical fertilisers, phosphatic, other than those which are clearly not to be used as fertilizers
182C	3104	Mineral or chemical fertilisers, potassic, other than those which are clearly not to be used as fertilizers
182D	3105	Mineral or chemical fertilisers containing two or three of the fertilising elements nitrogen, phosphorus and potassium; other fertilisers; goods of this Chapter in tablets or similar forms or in packages of a gross weight not exceeding 10 kg; other than those which are clearly not to be used as fertilizers”;

in Schedule II – 6%, serial numbers 66, 67, 68 and 69 and the entries relating thereto shall be omitted.

This notification shall come into force with effect from the 1st day of July, 2017.

(Mohit Tewari)
Under Secretary to the
Government of India

📚 Frequently Asked Questions (FAQs): Notification No. 18/2017 - Union Territory Tax (Rate)

Q1. What is Notification No. 18/2017-UTT(R)?

Answer: It is a GST rate amendment notification issued on 30 June 2017.
The notification reduced the UTGST rate on fertilisers from 6% to 2.5%, bringing the total GST burden down from 12% to 5%.

Q2. When did the reduced GST rate become effective?

Answer: From 1 July 2017.
The notification specifically states that the amendment became effective from the date GST was implemented.

Q3. What was the earlier GST rate on fertilisers?

Answer: The total GST rate was 12%.
This consisted of 6% Central GST and 6% Union Territory GST.

Q4. What is the revised GST rate on fertilisers?

Answer: The revised GST rate is 5%.
The tax consists of 2.5% CGST and 2.5% UTGST.

Q5. Which fertilisers are covered?

Answer: Nitrogenous, phosphatic, potassic, and mixed fertilisers.
These products fall under HSN codes 3102, 3103, 3104, and 3105.

Q6. Does the notification apply to urea?

Answer: Yes, generally.
Urea is a nitrogenous fertiliser and falls within the category of products covered under HSN 3102.

Q7. Are NPK fertilisers covered?

Answer: Yes.
Mixed fertilisers containing nitrogen, phosphorus, and potassium are covered under HSN 3105.

Q8. Does the benefit apply to products not used as fertilisers?

Answer: No.
The notification specifically excludes products clearly not intended to be used as fertilisers.

Q9. Why was the GST rate reduced?

Answer: To support agriculture and reduce farming costs.
The government aimed to make essential agricultural inputs more affordable.

Q10. Did the IGST rate also reduce?

Answer: Yes.
The overall GST structure was adjusted so that the IGST rate on fertilisers was effectively reduced from 12% to 5%, aligning with the domestic GST treatment.

Q11. How does this benefit farmers?

Answer: Farmers pay less tax when purchasing fertilisers.
Lower fertiliser costs can reduce total cultivation expenses and improve profitability.

Q12. Is Input Tax Credit affected?

Answer: No major change was introduced regarding ITC.
The notification primarily focused on reducing tax rates rather than changing ITC provisions.

Conclusion

Notification No. 18/2017-UTT(R) was one of the earliest and most significant agriculture-focused GST reforms. By reducing the GST burden on fertilisers from 12% to 5%, the government ensured that a critical agricultural input remained affordable.

For farmers, fertiliser manufacturers, distributors, and tax professionals, this notification illustrates how GST policy can be aligned with broader economic and agricultural objectives.