Agriculture SectorMostly Exempt

GST on Agriculture — Farm Produce, Inputs, Machinery & Services

Complete guide to GST on agriculture: fresh produce exempt, fertilizers at 5%, pesticides at 18%, farm machinery at 12%, agricultural services exempt, processed food taxation, and farmer registration requirements.

Exempt

Fresh Produce

5%

Fertilizers

18%

Pesticides

12%

Tractors

Exempt

Seeds

Exempt

Organic Manure

12%

Farm Machinery

Exempt

Agri Services

Agriculture GST Framework

Fresh Agricultural Produce — Exempt

All fresh, unprocessed agricultural produce is exempt from GST: fruits, vegetables, cereals (wheat, rice, millets), pulses, spices (unprocessed), milk, eggs, fresh meat, fresh fish, flowers, cotton (raw), jute, sugarcane, live animals for farming. The exemption covers items in their natural form without any processing beyond primary agriculture.

Fertilizers — 5% GST

All fertilizers attract a uniform 5% GST: urea, DAP (Di-Ammonium Phosphate), MOP (Muriate of Potash), NPK complex fertilizers, SSP (Single Super Phosphate), and micronutrients. Pre-GST, fertilizers were at 6-8% effective rate. Organic manure and compost: exempt. Bio-fertilizers: exempt. Subsidized fertilizer supply continues through DBT mechanism.

Seeds & Planting Materials — Exempt

All seeds and planting materials are exempt: cereal seeds, vegetable seeds, fruit seeds, flower seeds, GM seeds, hybrid seeds, grafts, saplings, tubers, bulbs, and rhizomes meant for sowing. Seed certification services: exempt. However, seed processing services (cleaning, grading, treating): 18% GST. Seed oil (by-product): applicable rates.

Farm Machinery & Equipment

Tractors: 12% GST (reduced from pre-GST ~20%). Harvester, thresher, rotavator: 12%. Hand tools (spade, sickle): 12%. Sprinklers, drip irrigation: 12%. Power tillers: 12%. Dairy machinery (milking machines): 12%. Food processing machinery: 18%. Cold storage equipment: 18%. Tractor parts: 18% (higher than tractor itself — inverted duty issue).

Agricultural Services — Mostly Exempt

Exempt agricultural services: cultivation, harvesting, threshing, plant protection, supply of farm labour, fumigation, packaging of agricultural produce, renting of agro-machinery, loading/unloading at farm. Warehouse for agriculture: exempt. Cold storage for agriculture: exempt. APMC mandi services: exempt. Crop insurance: exempt.

Processed Food & Value Addition

Once agricultural produce is processed, GST applies: wheat flour (branded/packaged): 5%, rice (branded/packaged): 5%, pickles/chutneys: 12%, jams/sauces: 12%, fruit juice (packaged): 12%, edible oil: 5%, sugar: 5%, honey (branded): 5%, spices (processed/packaged): 5%, frozen vegetables: 12%. The more processing, the higher the rate.

Agriculture GST Rate Table

Item/ServiceHSN/SACGST RateNotes
Fresh fruits & vegetables0701-0810ExemptAll fresh/unprocessed
Cereals (wheat, rice, millets)1001-1008ExemptUnbranded, loose
Milk (fresh)0401ExemptPasteurized or raw
Seeds for sowing1209ExemptAll agricultural seeds
Fertilizers (all types)3102-31055%Urea, DAP, NPK, MOP
Edible oil1507-15185%All cooking oils
Tractors870112%Agricultural tractors
Farm machinery (harvester)843312%Harvester, thresher
Pesticides/insecticides380818%All crop protection
Branded/packaged cereals10065%Pre-packaged & labelled
Processed food (pickles)200112%Value-added products
Agricultural services9986ExemptCultivation, harvesting

Frequently Asked Questions

Is agriculture exempt from GST?
Largely yes — fresh agricultural produce (fruits, vegetables, cereals, pulses, milk, eggs), seeds, organic manure, and most agricultural services are exempt. However, processed agricultural products attract GST: branded/packaged food at 5%, processed food at 12-18%. Farm inputs like fertilizers (5%), pesticides (18%), and machinery (12%) are taxed but at concessional rates.
What is the GST on fertilizers?
All fertilizers attract a uniform 5% GST — urea, DAP, NPK, MOP, SSP, and micronutrient fertilizers. Organic manure and compost are exempt. Bio-fertilizers are also exempt. The 5% rate was set to keep farming costs low while allowing manufacturers to claim ITC on inputs. Government subsidy on fertilizers continues separately through the DBT mechanism.
Do farmers need GST registration?
Generally NO — farmers selling only unprocessed agricultural produce (exempt from GST) do not need registration regardless of turnover. However, farmers engaged in: (1) sale of processed/packaged food above threshold, (2) rental of commercial property, (3) supply of taxable services must register if crossing ₹20 lakh threshold (₹10 lakh for special category states).
What is the inverted duty structure in agriculture?
Key issue: Farm machinery (tractors) at 12% but spare parts at 18%. Processed food at 5% but inputs (packaging, transport, power) at 18%. This creates 'inverted duty' where output tax is lower than input tax, leading to accumulated ITC that needs refund. Government has addressed some cases but the agriculture sector still faces this challenge in multiple product chains.

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