India is one of the top farming countries in the world. Our farmers produces a lot of different variety of crops and vegetation that is being consumed and exported to other countries as well. India is one of the biggest producers of wheat and rice after China. However, after the GST roll-out, the agricultural sector might get affected. Let’s discuss the positive as well as the negative impact that has been seen up till now after the GST roll-out.
Is It Important for Farmers to Get Registered under GST?
According to the GST, farmers do not have to get registered under the GST and compliance requirements. However, the exemption is only for those farmers who deal with agriculture and cultivation. They need not to do GST filing, if they do not come under the taxation slab. Another benefit is that there is no GST for seeds. As it is understood, that farmers need seeds for farming and cultivation, and so they are kept under the NIL category. Similarly, the organic manure is kept at nil whereas other fertilizers are taxed at twelve percent.
GST Rates on Agricultural Needs
GST registration online isn’t necessary for farmers but they have to pay tax according to the GST rate declared for basic agricultural need. Items such as seeds are exempted from GST whereas farmers have to pay the tax on other essential needs including fertilizers, pesticides and tractors.
Fertilizers is one of the most essential thing required for vegetation to grow properly. After the GST implementation, the government have raised the tax on fertilizers from five percent to 12 percent which was surprising for the farmers. Therefore, now it will be difficult for farmers to purchase fertilizers and they have to opt for organic fertilizers.
Again pesticides are used in huge quantities to kill pests that feeds on plant and destroy the crops. The rate of pesticides have been increased from twelve percent to eighteen percent, after the introduction of GST. Due to this reason, the pesticides are going to be costlier, thereby increasing the headache of the farmers.
In case of equipment and machinery that is required for harvesting crops are kept out from the GST tax liability. Therefore, the manufactures will have to pay tax for borrowing the spare parts and they cannot collect the same from farmers as they are free from the tax liability of such machineries associated with farming.
Agricultural sector in India is one of the largest sectors that produces crops in huge quantities. However, after the GST implementation, things have been different. Successful GST registration online is not necessary for farmers or agriculturists. Therefore, in some cases the impact of GST are positive whereas on the other side the GST might leave a negative impact.