What Are the Reactions to GST Reduction on Farm Inputs?
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Synopsis
The recent GST reduction on agricultural inputs has sparked diverse responses among farmers' unions. While some view it as a crucial step towards reducing farming costs, others argue it falls short of addressing the needs of the majority. Explore the implications of these changes and what they mean for farmers across India.
Key Takeaways
- GST reduction from 18% to 5% on major farm inputs.
- Positive response from Bharatiya Kisan Sangh.
- Concerns from other unions regarding the scope of the reduction.
- Full exemption on agricultural machinery poses challenges for manufacturers.
- Potential for increased food production with cheaper agricultural tools.
New Delhi, Sep 4 (NationPress) The Goods and Services Tax (GST) Council convened its 56th meeting on September 4, presided over by Union Finance Minister Nirmala Sitharaman, where it sanctioned a decrease from 18 percent to 5 percent on significant agricultural inputs including tractors, machinery, fertilizers, and irrigation equipment.
While the Bharatiya Kisan Sangh (BKS), aligned with the Rashtriya Swayamsevak Sangh (RSS), expressed approval for this decision, other groups are advocating for similar reductions on a broader range of items.
“This change is poised to revolutionize the agricultural sector and lower farming costs, directly benefiting small and marginal farmers,” remarked BKS General Secretary Mohini Mohan Mishra. He further added, “More affordable agricultural tools will enhance food grain production.”
In contrast, Raju Shetti, President of the Swabhimani Shetkari Sanghatana, questioned the impact, stating, “The GST reduction appears mainly for bio-pesticides, which are utilized by only 5 percent of farmers in India. How does this assist the majority?” He urged for similar tax cuts on chemical pesticides and insecticides, which are widely used by farmers.
Guni Prakash of the Bhartiya Kisan Union (Mann) also acknowledged the “relief” from the 5 percent GST on agricultural machinery, noting his involvement in a government committee addressing farmers' concerns.
When approached, a senior member of the Samyukta Kisan Morcha (SKM), a coalition of farmers' groups, labeled the move as “too little, too late,” indicating that they would assess the proposal further before an official response.
The Finance Ministry earlier indicated that the GST rate on agricultural machinery and equipment—including sprinklers, drip irrigation systems, and various harvesting machinery—has been reduced from 12 percent to 5 percent.
Regarding the full exemption for agricultural machinery, the ministry clarified that the aim of rate rationalization is to maintain a balance between users and producers. “While it is crucial to offer relief to farmers, we must also ensure that domestic manufacturing remains unaffected,” they stated.
They elaborated that a full exemption would prevent manufacturers from claiming input tax credit on GST paid for raw materials, subsequently increasing their effective tax burden and production costs. This could ultimately lead to higher prices for farmers, making the initiative counterproductive, as explained by the minister.
Point of View
I observe that the GST reduction on agricultural inputs is a significant yet complex development. It reflects the government's recognition of farmers' challenges while raising questions about the adequacy of such measures to benefit the broader farming community. We must advocate for balanced solutions that support both farmers and the agricultural economy.
NationPress
04/09/2025
Frequently Asked Questions
What is the new GST rate for agricultural inputs?
The GST rate has been reduced from 18% to 5% on major agricultural inputs such as tractors, machinery, fertilizers, and irrigation equipment.
Which farmers' unions have reacted positively to the GST reduction?
The Bharatiya Kisan Sangh (BKS) welcomed the decision, stating it will benefit small and marginal farmers.
What concerns have been raised about the GST reduction?
Some farmers' unions, such as the Swabhimani Shetkari Sanghatana, argue that the reduction primarily benefits a small percentage of farmers using bio-pesticides and call for broader tax cuts.
Why is a full exemption on agricultural machinery not feasible?
The Finance Ministry stated that a full exemption would hinder manufacturers from claiming input tax credit, potentially increasing production costs and ultimately raising prices for farmers.
What types of machinery are affected by the GST rate change?
The GST rate reduction applies to various agricultural machinery, including sprinklers, drip irrigation systems, and harvesting equipment.
