Ministers mulling GST reduction on agricultural inputs, equipment

The government on Tuesday informed the Lok Sabha that a Group of Ministers (GoM) was examining the proposal to reduce Goods and Services Tax on key agricultural inputs and equipment and would take a call on the same.

A previous attempt to lower GST on farm inputs was turned down by the GST Council.

Reduction in GST on farm products has been a long standing demand of farmers and would considerably reduce their input cost on production.

Replying to discussions on the Finance Bill 2025, which Lok Sabha passed later, Finance Minister Nirmala Sitharaman defended the GST regime as “progressive” and said the highest GST slab of 28 per cent was applicable only to less than 3 per cent items of common consumption while 60 per cent such goods attracted a GST of 5 per cent or lower.

About GST on agri products, Sitharaman said there was zero GST on seeds, 5 per cent on fertilisers, zero GST on agri implements manually operated or animal driven, 12 per cent on tractors and 12 per cent on agri pumps.

“A proposal to reduce the GST on farm inputs like tractors from 12 per cent to zero, farm equipment like drip irrigation system, other agricultural equipment, pesticides, fertilisers to zero was placed before the 45th GST Council on September 17, 2021. While the council did not recommend it then, the GoM is now reviewing it,” Sitharaman said.

She added that the GoM on GST rationalisation meets regularly to assess tax rates and make recommendations to the GST Council. Sitharaman also noted that the poorest 50 per cent of the population faced an average GST rate of 7.3 per cent, while the overall GST rate stood at 12.2 per cent as of March 2023 — down from 15 per cent at its introduction and in the pre-GST regime.

The minister said integrated GST on drugs for rare diseases, including muscular dystrophy, imported for personal use by patients were fully exempted from GST.

LS passes Finance Bill with 35 amendments

The Lok Sabha on Tuesday passed the Finance Bill 2025, along with 35 government amendments, including one that abolishes a 6 per cent digital tax on online advertisements. With the passage of the Finance Bill 2025, the Lok Sabha completed its part of the Budgetary approval process. The Rajya Sabha will now consider the Bill.

She further allayed concerns around “prasad” being taxed and said “prasadam being supplied by all shrines is exempt”.

Earlier, Sitharaman called the Finance Bill 2025 an “unprecedented tax relief” measure and defended the 13.14 per cent projected growth in personal income tax collection as realistic.

Explaining the impact of marginal relief, she said taxes on small earnings beyond Rs 12 lakh annually would be minimal. “If someone earns Rs 10,000 more than Rs 12 lakh, they would pay only Rs 10,000 in tax under the relief, instead of Rs 61,500. For an additional Rs 20,000, the tax would be Rs 20,000 instead of Rs 63,500,” she noted.