{"id":19104,"date":"2020-11-07T11:15:28","date_gmt":"2020-11-07T05:45:28","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=19104"},"modified":"2020-11-07T11:15:54","modified_gmt":"2020-11-07T05:45:54","slug":"gst-impact-on-the-agricultural-sector","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/gst-impact-on-the-agricultural-sector\/","title":{"rendered":"An Insightful Explanation on GST Impact on the Agricultural Sector"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Nearly\nevery expert in the taxation domain expects GST to render countless benefits to\nthe agriculture sector. The agricultural sector is one of the major\ncontributors to the Indian GDP. It encompasses around sixteen percent of Indian\nGDP. The implementation of GST has affected various sections of society in one\nway or another. <\/p>\n\n\n\n<p>One\nof the several problems encounters by this sector is transportation. GST is\nlikely to undermine this problem gradually. &nbsp;In this article we will be eyeing on the\nsignificant GST impact on the agricultural sector. <\/p>\n\n\n\n<p>Consequently, this may empower the government to set up the country\u2019s first national market for agricultural goods in the future. Farmers across our nation are still in a state of confusion as far as the tax rates under GST are concerned. Additionally, the special reduced rate for the item like coffee, tea, or milk is yet to be declared under <a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>Goods and services tax<\/strong><\/a>.\u00a0<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/gst-impact-on-the-agricultural-sector\/#Existing_Tax_Laws\" >Existing Tax Laws<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/gst-impact-on-the-agricultural-sector\/#GST_Impact_on_Agricultural_Sector\" >GST Impact on Agricultural Sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/gst-impact-on-the-agricultural-sector\/#Introduction_of_National_Agricultural_Market_NAM\" >Introduction of National Agricultural Market (NAM)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/gst-impact-on-the-agricultural-sector\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Existing_Tax_Laws\"><\/span>Existing Tax Laws<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The food item like salt, rice, flour, sugar, and wheat flour are exempted under CENVAT (Central Value Added Tax). In the state VAT regime, grains and cereals attract the tax @ 4%. Agricultural items undergo plenty of licensing and various indirect taxes such as excise duty, VAT, service tax as per the existing tax laws. Currently, the State VAT is not applied to all the agricultural goods in each state. However, a their certain category of food item that doesn\u2019t come under the ambit of State tax. These food items are eggs, meat, and vegetables, etc.\u00a0<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/impact-of-gst-on-restaurants-or-food-service-business\/\">Impact of GST on Restaurants or Food Service Business<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GST_Impact_on_Agricultural_Sector\"><\/span>GST Impact on Agricultural Sector<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>Following Section explains the GST Impact on Agricultural Sector<\/strong><\/em><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"596\" height=\"362\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-21.png\" alt=\"GST Impact on Agricultural Sector\" class=\"wp-image-19105\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-21.png 596w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/image-21-300x182.png 300w\" sizes=\"(max-width: 596px) 100vw, 596px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Enable Farmers\nto Avert Inadequate Expenses <\/h3>\n\n\n\n<p>GST\nis crucial to boost the transparency, timeline, reliability, of the supply\nchain mechanism. The improved supply chain mechanism would reduce the wastage\nof commodities and maximize the benefits for farmers. GST would also enable the\nfarmer to cut down the cost of production for agricultural commodities. Under\nthe GST regime, no exemption is given on poultry farming, stock breeding, and\ndairy farming.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Increased\nTax Rate on Fertilizers <\/h3>\n\n\n\n<p>Fertilizers\nan essential agriculture element that was taxed @ 6% under the previous tax\nregime, Under GST, the tax rate on fertilizers has been doubled i.e. 12%.\nComing to the agriculture machinery, the tax relaxation on the production of\nthe tractor is now removed. The manufacture has to pay the GST of 12% on the\nsame. However, this would enable the manufacturers to claim the Input Tax\nCredit.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Milk and\nTea Lures More Taxes <\/h3>\n\n\n\n<p>Coming\nto milk production, currently, only two percent of VAT is imposed on milk and\nmilk products. However, under the GST regime, no tax is levied on fresh milk.\nBut the skimmed and condensed milk attract 5% and 18% tax rate respectively.\nTea is one of the essential items in the household.&nbsp;The government might\ncrank up the price of tea by imposing GST @ 5% from the existing average of VAT\nrate of 4-5%. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Increased\nTax Rate for Agricultural Tools<\/h3>\n\n\n\n<p><em><strong>The following section shows the list of agricultural tools that attracts 12% GST<\/strong><\/em><\/p>\n\n\n\n<ul><li>Power-driven water pumps, centrifugal pumps (horizontal and      vertical), submersible pumps, deep tube-well turbine pumps, mixed flow and axial flow vertical pumps.<\/li><li>Agricultural, forestry, or horticultural machinery for the preparation      of soil or cultivation. This is also includes lawn or sports-ground      rollers.<\/li><li>Milking &amp; dairy machinery.<\/li><li>Composting Machines.<\/li><li>Self-loading trailers for agricultural purposes.<\/li><li>Germination plant equipped with mechanical or thermal machinery.<\/li><li>Poultry\u00a0incubators and brooders.<\/li><li>Harvesting or threshing machinery, including straw or fodder      balers; grass or hay mowers; machines for cleaning, sorting or grading      eggs, fruit or other agricultural produce.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Introduction_of_National_Agricultural_Market_NAM\"><\/span>Introduction of National Agricultural Market (NAM)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In\nthe year 2016, the central government comes up with a scheme called the\nNational Agricultural Market that facilitates unbiased trading of agri-commodities.\nThe National Agricultural Market facilitates traders, buyers, and farmers with\nonline-based trading in commodities. Due to complex VAT and APMC law, the\nimplementation of NAM could be a daunting task for the government.<\/p>\n\n\n\n<p>GST\nis essential for the seamless implementation of NAM. The numbers of indirect\ntaxes imposed on agricultural products would be integrated under GST. GST would\nallow traders to reap input credit for the paid taxes on every value addition.\nThis would also help in creating a transparent, seamless supply chain that\nwould result in a hassle-free movement of agri-commodities across India.<\/p>\n\n\n\n<p>The\nmajority of the agricultural commodities are consumable in nature. An effective\nGST implementation would improve the supply chain mechanism and reduce the\ntransportation time between the states. This increased efficacy would provide\nplenty of benefits to farmers and retailers.&nbsp;<\/p>\n\n\n\n<p>CST\/OCTROI\/Purchase Tax is the major contributor to transportation cost. The states like Haryana, <em><strong>Maharashtra<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Maharashtra\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>, and Punjab reaps more than Rs 1000 crore via such form of taxes. Under GST all these taxes shall be subsumed. Henceforth, the central government is required to find some ways to compensate these states for such loss of revenue.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A rise in the cost of\na few agricultural commodities is inevitable due to the surge in the inflation\nindex for a short period. However, GST is very much capable of filling these\ngaps. Its implementation would certainly help the farmers in many ways,\nparticularly in the longer run. With a unified national agriculture market in\nplace, the farmers can avert the scope of manipulation in terms of cost. <\/p>\n\n\n\n<p>GST implementation can get rid of steep expenses, particularly in terms of transportation of Agri commodities. By integrating all the indirect taxes, the GST would definitely be a great help for the farmers.\u00a0 To avail of more info on the topic i.e. GST Impact on Agricultural Sector, drop the queries in the comment section.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/benefits-of-gst-registration-online-in-india\/\">Everything you Need to Know about Benefits of GST Registration<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nearly every expert in the taxation domain expects GST to render countless benefits to the agriculture sector. The agricultural sector is one of the major contributors to the Indian GDP. It encompasses around sixteen percent of Indian GDP. The implementation of GST has affected various sections of society in one way or another. One of [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":19106,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[1187],"acf":{"service_id":"96"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":6627,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19104"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=19104"}],"version-history":[{"count":4,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19104\/revisions"}],"predecessor-version":[{"id":19110,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19104\/revisions\/19110"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/19106"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=19104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=19104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=19104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}