GST on Fertilizers, Agrochemicals & Seeds (2025) - New Rates & Savings for Farmers

Also read: GST on Tractor, Equipment & Tyres

The main fertilizers that farmers use such as Urea, Di-Ammonium Phosphate (DAP), NPK mixtures, and Muriate of Potash (MOP) are now taxed at only 2.5% GST. Earlier these fertilizers had 5% GST after 2017. This means that the tax rate has been reduced by half, so fertilizer prices are expected to come down in shops and cooperatives.

Many raw materials used in making fertilizers such as sulphuric acid, nitric acid and ammonia earlier had 18% GST. Now they are taxed at 2.5% GST. This is a big change because earlier raw materials were taxed higher than the finished product. This was called the “inverted duty” problem — when input cost was taxed higher than the final product. By cutting GST on these raw materials the government has made it easier and cheaper for fertilizer companies to produce fertilizers. This helps bring down prices for farmers.

Organic manure and compost if sold in bulk and not in branded packets are fully exempt from GST 0%. If organic fertilizers are sold in small branded packets they carry 2.5% GST. This keeps organic and natural farming affordable for small and medium farmers.

Bio-fertilizers (like Rhizobium, Azotobacter, Phosphate Solubilizing Bacteria, etc.) are mostly treated as organic products. They generally fall under the 0–5% GST range depending on packaging and classification. This makes natural soil-improving products cheaper and encourages eco-friendly farming.

Most chemical-based pesticides, insecticides, fungicides and weed killers now come under 9% GST. Earlier the tax was 18%. For example a pesticide bottle that earlier had ₹18 tax on ₹100 value will now have only ₹9 tax. This means a direct reduction in price for farmers buying pest and herb control products.

The GST on 12 major bio-pesticides (such as Bacillus thuringiensis, Trichoderma and neem-based bio-pesticides) has been cut from 12–18% down to 2.5%. Bio-pesticides are natural pest control agents that are safer for soil and humans. This tax cut makes them more affordable and encourages their use in organic and sustainable farming.

Special plant growth materials like zinc, boron, neem oil, gibberellic acid and other micro-nutrients under the Fertilizer Control Order are now taxed at 2.5% GST. Before this change they had 12% GST. This reduction helps farmers who use micronutrients to improve crop quality and yield. Examples:

All seeds used for planting such as those for wheat, paddy, maize, vegetables, fruits, flowers and even spices are completely GST-free. Farmers do not have to pay any GST when buying certified seeds for sowing.

Seeds that are not used for sowing such as mustard seeds for oil or sesame for oil extraction now attract 2.5% GST. Only seeds for planting are fully exempt.

Seeds used in fish farming and aquaculture such as fish fingerlings and shrimp seeds are also free from GST. This helps fish farmers save on input costs.

Equipment used for sowing and planting like seed drills, planters and fertilizer applicators are taxed at 5% GST. This is part of the agricultural machinery benefits.

As explained above seeds for sowing and organic manures are fully exempt from GST (0%). This means farmers can buy them without paying extra tax.

New biotechnology-based farming inputs such as bio-enzymes or genetically improved microbes often fall in the lower GST slabs or exemptions. This helps companies innovate and farmers access modern, eco-friendly solutions.

The government has also reduced GST on farm machinery and irrigation items. For example tractors, tillers, diesel engines (up to 15 HP) and drip irrigation systems are taxed at 5% GST. These changes reduce costs for farmers who buy new machinery or irrigation tools.