The Ministry of Agriculture and Farmers Welfare has announced new GST rate reductions aimed at lowering costs and increasing profits for farmers, dairy producers, and related sectors. The changes are expected to benefit small and medium-scale farmers by making agricultural equipment and inputs more affordable. Key reductions include a drop in the GST on tractors and their parts from 12-18% to a uniform 5%, which is anticipated to make mechanization more accessible. The GST on solar-powered irrigation equipment has also been reduced from 12% to 5%, which will help lower irrigation expenses.
In addition to farm machinery, the reforms also target essential agricultural inputs and processed goods. Bio-pesticides and micronutrients now have a reduced GST rate of 5%, down from 12%, which is intended to encourage a shift toward more sustainable farming practices. In the dairy sector, milk and cheese are now exempt from GST, while other dairy products like butter and ghee have had their rates lowered to 5%. This is meant to benefit dairy farmers, livestock owners, and consumers. Furthermore, the GST on ‘prepared or preserved fish’ and natural honey has been cut from 12% to 5%, which will support aquaculture and beekeeping industries. The reduction in GST on tendu leaves will also provide economic support for tribal communities.
The overall goal of these GST adjustments is to streamline costs for farmers and boost the agricultural economy. By reducing rates on a wide range of products, from fertilizers and farm machinery to food items and transportation vehicles, the government aims to enhance productivity and competitiveness in the domestic market. The changes are also expected to promote integrated farming and food processing, reduce the wastage of perishable goods, and make Indian-produced food items more competitive against imports. The Ministry states that these reforms will have a positive effect across multiple layers of the agriculture and allied sectors, strengthening food security and supporting self-reliance.
Ministry of Agriculture & Farmers Welfare
New GST rates: A boon for agriculture and farmers’ prosperity
“The nation is grateful to Prime Minister Shri Narendra Modi and the Finance Minister for the GST reforms”: Union Agriculture Minister Shri Shivraj Singh Chouhan
“New chapters of growth will be written in agriculture, and we will see positive results in every sector” – Union Agriculture Minister Shri Chouhan
The new GST (Goods and Services Tax) rates mark a major transformation in the agriculture and dairy sectors. With the reduction in GST rates, farmers, agricultural and dairy workers, and livestock owners across the country are expressing joy and gratitude to Prime Minister Shri Narendra Modi and Union Finance Minister Smt. Nirmala Sitharaman. Union Agriculture Minister Shri Shivraj Singh Chouhan termed the new rates a revolutionary decision, expressing hope for historic changes.
The impact of the GST reforms will be widely seen among small and medium farmers. Lower GST on agricultural machinery and solar-powered equipment will reduce farming costs and increase farmers’ profits. GST has been reduced on bio-pesticides and micronutrients, which will benefit farmers and encourage a shift from chemical to bio-fertilisers. In the dairy sector, milk and cheese will now attract zero GST, benefitting not only common citizens but also farmers, livestock owners, and dairy producers. The GST reforms will also promote integrated farming. Clear benefits will be visible in animal husbandry, beekeeping, fisheries, agroforestry, and poultry farming. Reduced GST on tendu leaves will strengthen the livelihood of tribal communities, while lower GST on commercial goods vehicles will make the transportation of farm produce cheaper.
Prices Down, Profits Up
| Tractor prices to reduce |
| Tractor parts to get cheaper |
| Agricultural equipment to become more affordable |
| Solar-powered irrigation devices will get cheaper |
| Fertilisers to cost less |
| Pesticides to get cheaper |
| Fruits and vegetables will get cheaper |
| Nuts to cost less |
| Boost to food processing |
| No GST on milk and cheese |
| Promotion of indigenous products |
| GST reduced on ‘prepared/preserved fish’ |
| Natural honey to cost less |
| Reduced GST on tendu leaves |
Detailed impact of GST cuts on various sectors
Agricultural Mechanisation
- GST on tractors (<1800 cc) reduced to 5%.
- Tractor parts, including tyres, tubes, hydraulic pumps: GST cut from 18% to 5%.
- Sprinklers, drip irrigation, harvesting machinery, tractor parts: GST cut from 12% to 5%.
- Fixed speed diesel engines (>15 HP), threshing/harvesting machines, compost machines: GST cut from 12% to 5%.
- Lower tractor prices will make mechanisation accessible to small and medium farmers, saving time, reducing labour costs, and improving productivity.
OLD AND NEW GST DIFFERENCE CALCULATION FOR VARIOUS SOME OF THE POPULAR AGRICULTURAL MACHINERY & EQUIPMENTS :- |
|||||||
Sl.No. |
Name of Agricultural Machinery & Equipment |
Basic cost of Agricultural Machinery & Equipment (Rs.) |
Present GST rate @ 12 %(Rs.) |
Total Cost with 12% GST(Rs.) |
Upcoming Revised GST rate @ 5%(Rs.) |
Total cost with revised GST @ 5%(Rs.) |
Saving(Rs.) |
1. |
Tractor 35 HP |
5,80,000 |
69,600 |
6,50,000 |
29,000 |
6,09,000 |
41,000 |
2. |
Tractor 45 HP |
6,43,000 |
77,160 |
7,20,000 |
32,150 |
6,75,000 |
45,000 |
3. |
Tractor 50 HP |
7,59.000 |
91,080 |
8,50,000 |
37,950 |
7,97,000 |
53,000 |
4. |
Tractor 75 HP |
8,93,000 |
1,07,160 |
10,00,000 |
44,650 |
9,37,000 |
63,000 |
5. |
Power Tiller 13 HP |
1,69,643 |
20,357 |
1,90,000 |
8,482 |
1,78,125 |
11,875 |
6. |
Paddy Transplanter- 4 row walk behind |
2,20,000 |
26,400 |
2,46,400 |
11,000 |
2,31,000 |
15,400 |
7. |
Multicrop Thresher – 4 tone/ hr capacity |
2,00,000 |
24,000 |
2,24,000 |
1,0000 |
2,10,000 |
14,000 |
8. |
Power weeder – 7.5 hp |
78,500 |
9,420 |
87,920 |
3,925 |
82,425 |
5,495 |
9. |
Trailer 5 tone capacity |
1,50,000 |
18,000 |
1,68,000 |
7,500 |
1,57,500 |
10,500 |
10. |
Seed Cum Fertilizer Drill – 11 tyne |
46,000 |
5,520 |
51,520 |
2,300 |
48,300 |
3,220 |
11. |
Seed cum Fertiliser Drill – 13 Tine |
62,500 |
7,500.00 |
70,000 |
3,125.00 |
65,625 |
4,375 |
12. |
Harvester Combine
|
26,78,571 |
3,21,428 |
30,00,000 |
1,33,928 |
28,12,500 |
1,87,500 |
13. |
Straw Reaper
|
3,12,500 |
37,500. |
3,50,000 |
15,625 |
3,28,125 |
21,875 |
14. |
Super Seeder
|
2,41,071 |
28,928.57 |
2,70,000 |
12,053 |
2,53,125 |
16,875 |
15. |
Happy Seeder
|
1,51,786 |
18,214 |
1,70,000 |
7,589.29 |
1,59,375 |
10,625 |
16. |
Rotavator
|
1,11,607 |
13,392 |
1,25,000 |
5,580 |
1,17,187 |
7,812 |
17. |
Baler Square
|
13,39,286 |
1,60,714 |
15,00,000 |
66,964 |
14,06,250 |
93,750 |
18. |
Mulcher
|
1,65,179 |
19,821 |
1,85,000 |
8,258 |
1,73,437 |
11,562 |
19. |
Pneumatic Planter
|
4,68,750 |
56,250 |
5,25,000 |
23,437 |
4,92,187 |
32,812 |
20. |
Sprayer Tractor Mounted
|
1,33,929 |
16,071 |
1,50,000 |
6,696 |
1,40,625 |
9,375 |
Fertilisers
- Ammonia, sulfuric acid, nitric acid: GST reduced from 18% to 5%.
- Reduction in rates will correct the inverted duty structure for fertiliser production.
Bio-Pesticides and Micronutrients
- 12 bio-pesticides and several micronutrients: GST cut from 12% to 5%.
- Bio-based inputs made more affordable, promoting eco-friendly and sustainable agriculture.
- Encourage farmers to shift from chemical pesticides to bio-pesticides, improving soil health and crop quality.
- Direct benefit to small organic farmers and FPOs under the government’s National Mission on Natural Farming.
Fruits, Vegetables and Food Processing
- Prepared/preserved vegetables, fruits, nuts: GST reduced from 12% to 5%.
- Boost to cold storage, food processing, and value addition.
- Reduction in wastage of perishables, ensuring farmers get better prices.
- Promoting export of processed food, strengthening India’s position as an agri-export hub.
Dairy Sector
- No GST on milk and cheese.
- GST on butter, ghee, etc., cut from 12% to 5%.
- Dairy farmers’ products made more competitive
- Milk cans (iron/steel/aluminum) now at 5% instead of 12%.
- Boost to indigenous dairy products.
Aquaculture
- GST on ‘prepared or preserved fish’ reduced from 12% to 5%.
- Likely to encourage aquaculture and fish farming nationwide.
Honey
- GST reduced on natural honey, benefitting beekeepers, tribal communities, and rural SHGs.
- GST on artificial honey (whether blended with natural or not) cut from 18% to 5%.
Solar-Powered Equipment
- GST on solar-powered devices reduced from 12% to 5%.
- Affordable solar equipment will lower irrigation costs, helping farmers.
Tendu Leaves
- GST reduced from 18% to 5%.
- As tendu leaves are a key source of income for farmers and tribals in Odisha, Madhya Pradesh, and Chhattisgarh, this cut will strengthen livelihoods in these states.
On the whole, the GST rationalization in agriculture is a farmer-friendly, pro-rural, and pro-sustainability reform — lowering costs for farmers, boosting cooperatives and FPOs, and strengthening food security. The boost in agriculture will happen at a multi-layered level and also to all its allied activities. The farm productivity will increase thanks to reduced fertilizer costs, the cold storage and Agri-processing will gain, and mechanization will increase in farming. In addition to all this, aqua culture, dairy farming and co-operatives involved in the same will become more profitable. The follow-on effect of the above will make us more competitive against imported food products and packaged foods. Our domestic food production would be more competitive compared to imports of food items, in order to become Atmanirbhar.
