FM Sitharaman Announces GoM Review of GST Cut Proposal for Farm Inputs

Farmers across India have long demanded GST reductions or abolition on different agricultural equipment and inputs. High taxes make farming more expensive and less profitable. Finance Minister Nirmala Sitharaman announced in Parliament on 25 March 2025, a proposal to reduce GST on drip irrigation systems, fertilisers, and pesticides. The Group of Ministers (GoM) on GST rationalisation is evaluating the proposal.

This evolution has spurred debates among farmers and beyond. Will this relieve farmers' problems? And what does the government’s stance on GST mean for the agricultural sector?

Demand of Farmers: Eliminate GST from Agricultural Inputs

Farm groups like Bharatiya Kisan Sangh (BKS) and other agrarian leaders are driving the push to remove GST on agricultural inputs. Higher input costs are cutting into profits, which makes it tough to keep farming going in the long run. A tax cut could give a boost to an industry dealing with changing market prices, unpredictable weather, and rising fuel prices.

The GST on a bunch of agricultural inputs is currently between 5% and 18%. Farmers argue that fundamental products, including fertilisers, seeds, and farm machinery, should either be zero-rated or taxed at the lowest possible slab if we are to keep the backbone of India's economy intact.

Government View: GST Is Not Regressive

While demand for lower GST gathers pace, Finance Minister Nirmala Sitharaman defended the current tax system. She disproved claims that GST is regressive by pointing out that just a small number of consumer goods meet the highest 28% tax bracket. She assesses that less than 3% of the commonly consumed items are taxed at the highest rate.

At the same time, the GoM seems pretty keen on looking into GST tweaks for agricultural inputs, which probably means some changes in the law are on the way. If the government goes for a tax cut, it could lower farming costs and make basic agricultural products more affordable.

A Policy Shift on the Horizon

Cutting GST on agricultural inputs might change things for farmers and the overall economy. If it gets approved, the tax cut would make farming less expensive, guaranteeing improved earnings for farmers and maybe even increasing output.

While the GoM reviews the proposal to determine if this demand truly results in some legal changes, everyone is observing the forthcoming GST Council sessions. Farmers, legislators, and corporate leaders are all tightly bound by a choice that might truly shape Indian agriculture in the future.

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