Tax Reductions Could Lower Agricultural Costs by One-Third
The Goods and Services Tax (GST) Council’s decision to reduce taxes on agricultural, dairy, and fisheries-related equipment and products is expected to significantly lower farmers’ expenses. Analysts estimate that production costs could drop by nearly one-third, directly improving farmers’ incomes while making agriculture more sustainable.
Direct Benefits to Farmers
The new GST structure reduces the tax on key farm machinery and inputs. For instance:
- Tractors priced around ₹5 lakh, earlier attracting 12% GST, will now draw just 5%, leading to savings of nearly ₹35,000.
- Rotavators costing ₹1.5 lakh will see tax reductions that cut prices by about ₹14,000.
- Modern irrigation systems, sprayers, and aquaculture equipment have also moved to lower tax slabs.
These savings are expected to directly benefit rural households, bringing down the cost of milk, paneer, ghee, and even ice cream. The dairy and fisheries sectors are likely to see a significant boost as lower tax burdens make operations more viable.
Impact on Rural Economy
Tax cuts on fish farming will make products like prawns, catfish, and processed seafood cheaper, improving quality and affordability. Experts suggest this will encourage more rural households to diversify into allied sectors such as fisheries, boosting rural employment and income.
Additionally, expensive equipment like deep irrigation systems, fish feed, and cold storage units will now be more affordable, addressing long-standing challenges in rural productivity and perishables management.
Long-Term Gains
Experts believe the reforms will not only reduce costs but also support mechanization, better quality yields, and higher rural consumption. By lowering barriers to modern equipment and essential inputs, the reforms could pave the way for a more self-reliant and competitive farm sector.
