Indian government has acknowledged that manufacturers of agricultural pump-sets have reported a decline in sales due to the increase in GST from 12% to 18%. However, no official data on a 10% decline in sales has been brought to the government’s notice. The GST rate hike was implemented following the 47th GST Council meeting in June 2022, based on recommendations from the Group of Ministers on Rate Rationalization. The increase aimed to correct the inverted duty structure. Regarding concerns over claiming input tax credit refunds, the government clarified that since both pumps and their parts now fall under the 18% GST bracket, the issue of refunds does not arise. Any future changes in GST rates will depend on further recommendations from the GST Council.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO.2662
TO BE ANSWERED ON MONDAY, MARCH 17, 2025
GST HIKE ON AGRICULTURAL PUMP-SETS
2662. SHRI SELVAGANAPATHI T.M.:
Will the Minister of FINANCE be pleased to state:
a. whether it is a fact that the manufacturers of the agricultural pump-sets have been badly hit during the last three years due to the hike in the Goods and Services Tax rates on their product;
b. whether it is also a fact that the sales of pump sets has been slided by 10% of the total agriculture pump sets sales after the introduction of 12% GST;
c. whether it is also true that the pump set manufacturers had problems in claiming refund of input tax credit as the rate of GST has been increased to 18% from 12%; and
d. if so the steps proposed to be taken by the Government in this regard?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) A reference received from manufacturers association has stated that increase in GST rate from 12% to 18% on water pump sets has led to reduction in sales by organized pump manufacturers.
(b) No such information has been brought to the notice of Central Government.
(c) & (d): GST rates are prescribed based on the recommendation of the GST Council which is a constitutional body comprising of representatives from Union and State Governments/UTs. The GST Council in its 47th meeting, held in June 2022, accepted the recommendation of the Group of Ministers on Rate Rationalization to increase the GST rate from 12% to 18% to correct inversion in duty structure. Since, the GST rate on both pumps and their parts are at 18%, the issue of refund does not arise.
