High GST on farm machinery to hit farmers

By Vijay C Roy

Chandigarh : The high rate of GST on farm machinery, including threshers, rotavators, laser levellers etc and agriculture implements, is likely to hit manufacturers and the farmers. At present, there is no excise duty and also no VAT on farm machines and implements in most of the states.

According to industry, almost every farmer in the country use farm machinery and equipment either by taking it on rent or by purchasing, so the increase in prices of implements will increase their input cost.

“There is no excise duty on agriculture implements and machinery. Also, there is no VAT in most of the states on farm machines and implements. Under the GST, farm machinery will be subjected to 12% duty whereas agricultural implements have been put under 28% tax slab. This will put an extra burden on farmers as manufacturers would be compelled to increase the prices. Thus, the imposition of taxes will act as a stumbling block in farm mechanisation, which will hit farmers and ultimately affect the productivity,” said Sonalika Group’s vice-chairman AS Mittal.

According to the Agricultural Machinery Manufacturers’ Association, the total size of the agriculture farm machinery in India is over Rs 32,000 crore, with over 1.50 lakh units, including large, MSME and tiny units engaged in manufacturing. In Punjab alone, there are over 3,000 units engaged in manufacturing farm machinery and components.

Echoing similar sentiments, Shamsher Singh, GM (Marketing), Preet Agro Industries (P) Ltd, said: “The move by the Central government to impose 12% duty on farm machinery will hit the industry hard as it will push the prices of the finished product, putting an extra burden on the farming community.” Preet Agro manufactures and exports agricultural farm machinery, harvester equipment, tractor farm equipment, combine harvesters and tractors.

The industry has requested the Finance Ministry to reduce the duty on agriculture machinery to 5% in the interest of farmers and also lower the tax structure on implements.

Source: The Tribune