India is a nation during which Agriculture is its largest contributing sector. Small scale agriculture has been nontaxable under GST and most of the essential agricultural products which are sold in fresh form don't have any GST. However, GST compliance and GST registration could also be mandatory for giant scale farmers and agricultural companies. during this article, we glance at the impact of GST on the agriculture sector.
Is GST Applicable for Agriculture?
As per the GST Act, only a farmer, to the extent of supply of agriculture cultivated from land is free from the need of GST registration online. In detail, as per GST Act an agriculturist as a private or as a Hindu Undivided Family who takes on agriculture or cultivation of land:
-> By own labour, or
-> By the labour of family, or
-> By servants on wages payable in cash or by hired labour or kind under personal supervision or the personal supervision of any member of the family
Therefore, only small farmers or agriculturalists would be exempt from GST registration and GST compliance. a person who owns or runs a LLP or a corporation or the other sort of entity which is said to agriculture would be required to urge GST compliance or GST registration if the annual turnover criteria or other GST registration criteria of the entity is satisfied and that they sell products or commodities associated with agriculture that attract GST.
Should Agriculturalists Pay GST?
As per the GST Act, only an agriculturalist as defined above is exempted from GST, many others who are involved in formal agricultural business are often responsible for GST registration and GST compliance. Basically, GST may be a consumption-based tax that's a person who is involved in agricultural businesses with GST registration would even be susceptible to take the input decrease on GST paid and impart the last word GST liability to their end consumer.
From another point of view, an agriculturalist consistent with the GST Act not getting GST registration doesn't mean that they don’t need to suits GST requirements. However, a farmer or an agriculturalist would still need to pay GST when he purchases a product that draws GST tax. as an example , the GST rate of 12% is applicable to items, like water pumps, milking machines and self-unloading trailers and is employed for agricultural purposes. Therefore, when an agriculturalist buys any of those products he has got to pay GST as these products attract GST.
GST Rates on Agricultural products
Vegetables and other products from agriculture, like dairy, products which are served freshly with none processing or preserving techniques are exempt from GST. As per GST, a person who is engaged solely within the business of trading goods or services or both which aren't eligible for tax or wholly free from GST isn't needed to urge GST registration.
Even a proper farmer or an agriculturalist who is selling fresh products or product would be exempt from GST registration or GST compliance because they are available under the category of a private engaged exclusively within the business of supplying goods or services or both that aren't susceptible to tax or wholly exempt from GST.
GST Rate for Fertilizers & Seeds
Fertilizers a crucial input of agriculture and farmers, it had been previously taxed at 6% (1% Excise + 5% VAT). Under GST regime, tax on fertilizers has been fixed as 5%. As per GST norms, there's no GST on Seeds which are used for sowing purpose. Therefore agriculturalists or farmers don’t need to pay GST tax on seeds used for sowing.
GST Rate for Agricultural Tools
Following are the kinds of agricultural tools which come under the category apply to NIL GST:
Agricultural tools which are operated by hand or operated with the assistance of animal or animal driven tools or hand tools like spades, bill hooks, shovels, picks, mattocks, forks and rakes; hoes, axes, and similar hewing tools; secateurs and pruners of any kind; scythes, hedge shears, sickles, hay knives, timber wedges and other tools which are utilized in agriculture, horticulture or forestry sector.
The following are the sort of agricultural tools that come under the category of fifty GST rate:
->Solar hot-water heater and system
->Hand pumps and parts
->Waste to energy plants or devices
->Solar lantern and solar lamp