Mixed reaction from farm unions on GST reduction in farm inputs

New Delhi, Sep 4 The Goods and Services Tax (GST) Council, in its 56th meeting chaired by Union Finance Minister Nirmala Sitharaman on September 4, approved a cut from 18 per cent to five on major agricultural inputs like tractors, machinery, fertilisers, and irrigation equipment.

While the Rashtriya Swayamsevak Sangh (RSS)-affiliated farmers’ union Bharatiya Kisan Sangh (BKS) on Thursday welcomed the decision, others have demanded similar changes across other items as well.

“This will certainly bring about a big change in the agricultural sector and reduce the cost of farming, which will directly benefit small and marginal farmers,” said BKS general secretary Mohini Mohan Mishra.

“Cheaper agricultural tools will help increase food grain production,” he stated.

However, pointed out Swabhimani Shetkari Sanghatana president Raju Shetti, “What I gather is that the GST reduction has been announced only for bio-pesticides. Such bio-pesticides are used by barely five per cent of the farmers in India. How does it benefit the majority?”

He demanded a similar tax reduction for chemical pesticides and insecticides, which, according to him, are used by a huge majority of croppers across the country.

Bhartiya Kisan Union (Mann) leader Guni Prakash also welcomed the “relief provided by imposing 5 per cent GST on agricultural machinery”.

Incidentally, he is among the members, part of the government-appointed committee looking into farmers’ demands.

Earlier, both BKS and BKU (Mann) had asked Prime Minister Narendra Modi to exempt GST on agricultural machinery.

When contacted, a senior leader of the Samyukta Kisan Morcha (SKM), a platform of several farmers’ organisations, termed it as “too little, too late”. When asked to expand, he said that his organisation was currently “studying” the proposal and would give an official reaction later.

About five years ago, the SKM spearheaded a year-long agitation against the now-repealed farm laws.

In its statement earlier, the Finance Ministry had announced that the GST rate on agriculture machinery/equipment such as, sprinklers, drip irrigation system, Agricultural, horticultural or forestry machinery for soil preparation or cultivation; lawn or sports-ground rollers, harvesting or threshing machinery, including straw or fodder balers; grass or hay mowers, other agricultural, horticultural, forestry, poultry-keeping or bee-keeping machinery, composting machines etc, which earlier attracted 12 per cent GST, has now been reduced to 5 per cent.

On the question of full exemption on the agriculture machinery, the ministry statement explained that the objective of the rate rationalisation is to maintain the balance between users and producers.

“While providing relief for the farmers, it is important that the domestic manufacturing does not get adversely impacted,” he said.

It added that if the agricultural machinery is fully exempted, the manufacturers/dealers of these goods would not be able to claim input tax credit on the GST paid on raw materials and would have to reverse the ITC paid on the inputs.

“This would increase their effective tax incidence and cost of production. This may in turn be passed on to farmers in the form of higher prices, which in turn would make the measure counterproductive,” said the minister.

--IANS

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