GST cut on farm equipment could lead to 6-7% saving, ministry data shows

The Finance Ministry last week lowered the GST on major farm equipment from 12 per cent to 5 per cent, which is expected to lead to significant savings in production costs for farmers and also improve mechanisation.

 

At a press conference today, Union Agriculture Minister Shivraj Singh Chouhan released a list of items whose prices will come down due to the GST rate cut. The list showed that prices of all major farm equipment will fall by a minimum of 6–7 per cent from their existing rates (see chart). 

Name of Agricultural Machinery & Equipment	Total Cost with 12% GST	Total cost with revised GST @ 5%	Saving
	(Rs.)	(Rs.)	(Rs.)
Tractor 35 HP	650000	609000	41000
Tractor 45 HP	720000	675000	45000
Tractor 50 HP	850000	797000	53000
Tractor 75 HP	1000000	937000	63000
Power Tiller 13 HP	190000	178125	11875
Paddy Transplanter- 4 row walk behind	246400	231000	15400
Multicrop Thresher - 4 tone/ hr capacity	224000	210000	14000
Power weeder - 7.5 hp	87920	82425	5495
Trailer 5 tone capacity	168000	157500	10500
Seed Cum Fertilizer Drill - 11 tonne	51520	48300	3220
??Seed cum Fertiliser Drill - 13 Tonne	70000	65625	4375
Harvester Combine	3000000	2812500	187500
14 feet Cutter Bar
Straw Reaper 5 feet	350000	328125	21875
Super Seeder 8 feet	270000	253125	16875
??Happy Seeder 10 tonne	170000	159375	10625
Rotavator 6 feet	125000	117187	7812
Baler Square 6 feet	1500000	1406250	93750
Mulcher 8 feet	185000	173437	11562
??Pneumatic Planter 4 row	525000	492187	32812
??Sprayer Tractor Mounted 400 Lts capacity	150000	140625	9375

 

The new GST rates and slabs will have a wide-scale impact on the agriculture sector. This will especially benefit small and medium farmers. “Due to reduced GST rates on agricultural equipment, the cost of agriculture will decrease and farmers’ profits will increase,” Chouhan said.

 

The Union Ministry for Animal Husbandry, Dairying and Fisheries, meanwhile, said that rate cuts on milk and milk products will have a direct bearing on 10 crore milk farmers across India.

 

Meanwhile, the Federation of Seed Industry of India (FSII), in a statement welcoming the GST cut on all agriculture items, said that while seeds as a final product are exempted from GST, the industry is unable to claim the benefit of input tax credit as all critical items such as packaging, logistics, warehousing, and chemical seed treatments attract GST at standard rates. This leads to a higher effective tax burden on seeds compared to other agri-inputs that enjoy concessional rates. FSII urged that this anomaly be corrected.