21 Jun 2017


Effect of GST on farmers - What Impact would GST have on Agriculture Sector

Effect of gst on farmers

GST is going to harm the agriculture sector really hard, there is misconception that Agri income is out of tax purview so people in the agriculture sector wont get affected -Let me condemn this perception and bring you to real fact of agri sector.
effect of gst on farmers

GST will impact agriculture very badly by increasing the input cost of raw material used by farmers Here are few examples -
  1. GST rates on Fertilizers have gone up from existing (5–7 ) % to 12 %, this is going to hit very very hard to farmers. I remember 3 years before Urea bag of 50kg was 250Rs today it is already Rs 750 after GST it is going to more expensive. You can imagine how can farmers even afford the fertilizer in these cases.
  2. Let me give one more examples -GST Rates of Pesticides have gone from existing 12–15% to 18%, this is really huge. People sitting at top thinks farmers can be be-fooled they wont protest if we increase the cost in the back end, however my dear bureaucrats - your masters have to pay for making life of farmers hell by playing with farmers life.
  3. Changed the Definition of Agriculturist in the new GST Law i.e. many activities are taken out of agriculture purview like dairy farming which were previously considered as agriculture i.e.

The points to note down are what has been covered in the definition of 'Agriculture' and what not? “Hence we can see a lot of agriculture activities which are not taxable under present laws, will now be subject to GST in the new regime.

   4 . Let me tell you one more technical aspect for not putting any GST tax on Tractors - Government has put these manufactures out of Benefit if INPUT TAX CREDIT i.e. now manufactures of tractors will pay taxes for borrowing the spare parts however they can not collect from farmers thus manufacture will try to include that tax in tractor cost itself, this how agriculture and agi-dependent sector is going to get badly affected with GST.

     5. These are just few solid examples - Farmers buy many things as raw material from shops pay the tax however same tax input credit is not available to them, what I mean by this is - “ A farmer bought 1000 Rs pipe paid 120 Rs as tax however since agriculture is not under tax it can not collect tax or reverse this tax with facility of input tax credit to buyer of their goods - I think the people who understand GST would have got it right. Let us give an analogical example - A Car manufactures buys the spare parts from other supplier and pay x amount of tax on it, now this car manufacture get back this x amount of tax while selling the car to customers- This is was the most amazing thing with GST by Poors farmers can not get back the tax they paid while buying equipment's, fertilizers, pesticides etc.

    6. Dark Side of In-direct Taxes- Farmers, Labours, Lowe Class peoples are most affected by these in-directed taxes since they have to pay the tax irrespective of their income level for example - A farmer or upper middle class guy buy a Match Box or anything then both has to pay the equal amount tax on it, ideally the people having less income should pay less tax however both has to pay same tax in this case lower income class people are affected most - That is why poors are getting more poorer day by day and there is huge gap in the income of poor to middle class people or lets say Urban to Rural economy.

I agree few things are going to be cheaper not for farmers but for all, taxes have increased for super luxurious services etc however middle class people are relived for more tax burden, however farmers are taxed more.

This is the irony of our Nations Anna-daata- “Save Farmers”.