Huge burden for players in farm produce as warehouses comes under GST net

Collateral management firms working on rented warehouse model hit as they cannot avail input credit, given that farm commodities themselves are outside the GST net

The move by the government to bring warehouses under the Goods and Services Tax (GST) net is likely to have a major impact on players in the organised sector who take warehouses on rent as part of their collateral management business. They see a huge burden especially when they deal in farm commodities.

Agri commodities collateral management business has flourished the past few years as companies in this space help farmers and processors get finance from banks and non-banking institutions. The new government decision means that they have to pay now 18 per cent GST on the rent they pay