Explained—From Tractors To Milk, How The New GST Rate Cuts Aim To Reduce Farm Costs And Raise Rural Incomes

The government has announced sweeping GST cuts that it says will ease the burden on farmers by thousands of rupees per purchase — from tractors and threshers to fertilizers, milk products and even honey.

In a press conference, Agriculture Minister Shivraj Singh Chouhan has called the move a “boon for farmers,” arguing that it will lower production costs and raise rural incomes at a time when small and medium cultivators are struggling with rising input prices and shrinking margins.

The new GST rates will come into effect from 22 September, the first day of the Navratri festival.

Farm Machinery Now Cheaper

One of the clearest impacts will be on farm machinery. Tractors and equipment that earlier attracted 18 per cent GST will now be taxed at just 5 per cent.

In real terms, this means: a 35 HP tractor priced earlier at Rs 6.5 lakh will now cost around Rs 6.09 lakh, saving the farmer Rs 41,000, according to the Agriculture Ministry.

A 45 HP tractor that used to be about Rs 7.2 lakh will now cost Rs 6.75 lakh, saving Rs 45,000.

The biggest relief comes on higher capacity machines — a 75 HP tractor that earlier cost Rs 10 lakh will now be available for about Rs 9.37 lakh, cutting the bill by Rs 63,000.

Smaller implements are also affected: a paddy planting machine that cost Rs 2.20 lakh will now be cheaper by about Rs 15,400, while a multi-crop thresher will see a reduction of Rs 14,000.

Even a power weeder, usually priced around Rs 78,000, will now save the farmer nearly Rs 5,500.

Fertilizers and Organic Inputs

Fertilizer costs are another area of relief.

GST on key raw materials like ammonia, sulphuric acid and nitric acid has been cut from 18 per cent to 5 per cent.

The minister said that this would bring down the price of finished fertilizers, directly benefiting farmers

Bio-pesticides and micronutrients have also been made cheaper.

The minister argued this would encourage farmers to shift away from chemical fertilizers and towards natural and organic farming, as the cost of organic inputs will now fall.

Dairy Sector Relief

In the dairy sector, milk and cheese have been fully exempted from GST, while rates on ghee, butter and milk cans have been reduced.

For dairy farmers and cattle rearers, the government expects this to translate into higher demand and better margins.

Boost to Allied Sectors

Allied activities are also included in the relief package.

Honey, fish products, preserved fruits and vegetables now attract lower GST, making beekeeping, fish farming and food processing more profitable.

Cold storage and processing units, which are critical to reducing post-harvest losses, will also benefit from the lower tax.

Rural Economy and Women’s Groups

The reforms extend into rural infrastructure too.

Lower GST on cement and iron will bring down the cost of building houses under the Pradhan Mantri Awas Yojana, as well as schools, Anganwadis and Panchayat Bhawans.

Women’s self-help groups engaged in handicrafts, dairy and food processing — the so-called “Lakhpati Didis” — are expected to gain as tax relief makes their products more affordable and marketable.

Government’s Larger Aim

According to Chouhan, the principle is straightforward: if the cost of production falls while output rises, farm profitability will go up.

He described the changes as part of Prime Minister Narendra Modi’s “next generation GST reforms,” and linked them to the government’s larger vision of integrated farming, where crops are combined with animal husbandry, poultry, fisheries and agro-forestry to diversify income.

In his words: “If production increases and cost decreases, then the farmer’s profit in farming will increase.”

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