Amarinder to Modi - review of tax on agricultural goods under GST

Punjab chief minister Captain Amarinder Singh has requested Prime Minister Narendra Modi to review tax rates on agriculture-related goods under the new regime of GST to provide relief to beleaguered farmers.

In a letter to the PM, Amarinder has expressed concern at the increased rates of taxation imposed under GST on agricultural inputs, including implements and drip irrigation equipment. This segment is now taxed at 18%, up from 5% tax under the VAT regime.

The CM, while citing data, also pointed out that while VAT on fertilisers had been 2%, the GST now was 5-18%. Likewise, from VAT of 12.5%, tax on insecticides had increased to 18% under the GST regime. On tractors, the VAT was 6.05%, with the GST now at 12-28%. The respective figures for mechanical parts were 12.6-14.6% (VAT) and 18% (GST).

Tax on micro nutrients has been doubled from 6% under VAT to 12% under GST, while that on canned food items had increased from 5% (VAT) to 12% (GST), Amarinder pointed out in the letter, adding that the increase ranged from 3% to 21.95%.

The cost of cultivation was only likely to increase with the implementation of the GST regime with higher taxation levels, further impairing the financial health of the beleaguered farmers, he said.

The CM out that increased taxation levels might hinder the adoption of micro-irrigation technologies under the Pradhan Mantri Krishi Sinchai Yojana, instead of enabling the government to incentivise their adoption to conserve fast-depleting water resources.