GST Cuts On Farm Inputs To Lower Costs & Boost Farmers’ Incomes

The GST Council has announced significant tax cuts on key agricultural inputs, signalling a major relief for Indian farmers.

The government has taxed bio-pesticides, farm machinery, and fertiliser raw materials at just 5 per cent, which will lower the cost of cultivation and ease the financial burden on rural households.

The government expects the reduction in fertiliser inputs to correct the inverted duty structure, enabling manufacturers, particularly MSMEs, to access working capital more efficiently and lower their financing costs.

Rajib Chakraborty, national president of the Soluble Fertiliser Industry Association, said the move allows manufacturers to procure inputs at the same rate as finished goods, which improves liquidity and cash flows.

Farm Machinery & Equipment Relief

Agricultural machinery prices, which have surged in recent years, are also set to fall. Tractor manufacturers such as Mahindra and Mahindra anticipate a ₹50,000–₹60,000 drop per unit.

CRISIL estimates retail prices of bio-pesticides will fall by 4–6 per cent, while micro-nutrients could decline by 3–6 per cent.

However, some experts argue that certain essential items, such as brush cutters, pit diggers, chainsaws, and water pumps, remain taxed at 18 per cent, limiting the full potential of mechanisation.

Ankit Chitalia, MD of KisanKraft, called for a uniform 5 per cent GST on all critical farm equipment to promote modernisation effectively.

The government has also lowered GST on fish oils, extracts, and prepared or preserved seafood from 12 per cent to 5 per cent, making products more affordable domestically and boosting export competitiveness.

Inputs for aquaculture, including fishing nets, now attract 5 per cent GST.

Meanwhile, the sugar and confectionery sectors stand to benefit from a reduction in GST on bakery products from 18 per cent to 5 per cent, potentially driving higher sugar demand.

However, flour millers note that the zero GST on packaged rotis and parathas will not substantially benefit homemakers, who continue to pay 5 per cent GST on staple ingredients like atta and maida in smaller packs.

The government expects these reforms to ease input costs, stimulate production, and strengthen farmers’ purchasing power, marking a critical step in modernising India’s agriculture while addressing longstanding fiscal disparities in the sector.

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