0% Effective GST on Agricultural Inputs

Compared to the previous tax regime, GST penalises the small-scale farmer severely.
Our country has various legislations on equitable grounds, for example, reservation for backward community aiming at bringing them to the same level as others. Similarly, if the taxation laws are not drafted favouring farmers, farming can never become the main livelihood of a person aspiring to live as a farmer.

Public statements by both the state and central governments show a commitment to promoting
agriculture sector, however, current GST is not aligned with that stated purpose.

This petition refers to all inputs to agriculture, like, agricultural machinery, manure etc.

Consider the example of a farmer buying a rocker sprayer, a basic necessity in any farm to spray pesticides etc for his plants. It costs INR 5500. However, the GST is 18% where he pays INR 990 (that is around 2 days of farm labour wages.). If he buys a diesel powered weeder, he pays around INR 13000 in GST.(around 26 days for farm labour wages)

There is an organised voice for the machinery manufacturers. It is definitely beneficial for the equipment manufacturers to have GST charged to the farmer, so that they can reclaim GST paid to his suppliers for parts used to make the finished product. I am not suggesting to penalise the equipment manufacturer. Possibly subsidies should take care of at least reclaiming the GST along with a lower GST on those items so that the initial cash outlay of the farmer is reduced. Subsidies are an equitable solution. For example, bring the GST down to say 5% on farming equipments and refund that 5% to the farmer as subsidies by Agricultural Departments. Equipment manufacturers do get a chance to reclaim, less initial capital outlay for farmers and less subsidy burden for the government.

Similar scenario applies to for example, organic manure. Each kilo of organic manure attracts around INR 1.5. Now if the farmer wants to grow plantains organically, other than the cost of organic manure being high, he has to pay INR 6 in GST itself per plant. One could imagine where it leads to. It becomes difficult for the farmer to even consider organic farming.

Action Needed:
The effective GST paid by farmers for agricultural inputs should be 0%