PUNJAB CM WRITES TO MODI FOR REVIEW OF TAX ON AGRICULTURAL GOODS UNDER GST

Chandigarh, September 25, 2017: Punjab Chief Minister Captain Amarinder Singh has urged Prime Minister Narendra Modi to review the tax rates imposed on agriculture related goods under GST in order to provide relief to the beleaguered farmers.

In a letter to the Prime Minister, Captain Amarinder expressed concern at the increased rates of taxation imposed under GST on agricultural inputs, including implements and drip irrigation equipment, which had witnessed a hike from 5% under VAT to 18% under GST – a hike of a whopping 13%.

Citing data, the Chief Minister pointed out that while VAT on fertilizers had been 2%, the GST now was 5-18%. Likewise, from a VAT of 12.5%, tax on insecticides had increased to 18% under the GST regime. In the case of tractors, VAT had been 6.05% while GST is 12-28%, while the respective figures for mechanical parts were 12.6-14.6% (VAT) and 18% (GST).

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

Captain Amarinder observed that the Agriculture sector was in the throes of an unprecedented crisis with falling real farm incomes and mounting agriculture debt. 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 added.

The Chief Minister further pointed 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 incentivize their adoption to conserve the fast depleting water resources.