GST – A Boon to agriculturist
By: – CA Akash Phophalia
Goods and Services Tax – GST
Dated:- 11-8-2016
Editorial Note
The concept of indirect taxation is in the process of revolutionary change. Concept of manufacturing, sale and provision of service are going to be merged in the new concept of supply. This article aims at enlightening readers about the current provision of Model GST law in relation to agriculturist.
Introduction
India is the land of villages. The saying is clear about the core activities of majority residents of our country. Agriculture is the key activity and needs to be kept out of the purview of taxation law. Currently, it is out of the purview of excise and core agriculturally and related activities are kept out of service tax law also. Further, VAT law has also kept agricultural products out of taxation regime. This intent of law is seemed to be carried as legacy under the upcoming new GST regime also.
Meaning of Agriculture
Clause 2(7) of Mode
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personally”. The meaning of this term is explained hereunder.
Meaning of “to cultivate personally”
It means to carry on any agricultural operation on one's own account –
(a) by one's own labour, or
(b) by the labour of one's family, or
(c) by servants on wages payable in cash or kind (but not in crop share) or by hired labour under one's personal supervision or the personal supervision of any member of one's family.
As per explanations given in the said clause, a widow or minor or a person who is subject to any physical or mental disability or is a serving member of the armed forces of the Union, shall be deemed to cultivate land personally if it is cultivated by her or his servants or by hired labour. In case of Hindu undivided family, land shall be deemed to be cultivated personally, if it is cultivated by any member of such family.
Who can be an agriculturist?
Form the plain reading of the meaning of agriculturist it gives an impression that any person whether it may be an
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here in the Model GST law. So, it had to be understood in the common parlance. Although agricultural operations are normally carried on the land which is called as an agricultural land in common parlance. But it is not statutorily required that the land has to be an agricultural land. Further, it is noticeable point that agricultural operations could be carried out at any place and not essentially on ground land.
Benefit to agriculturist
Tax under GST law is payable by the taxable person and it is the taxable person who needs to comply with all the formalities under GST law. Taxable person is defined under clause 9 of the Model GST law. The said clause provides that an agriculturist shall not be considered as a taxable person. It implies that once a person is an agriculturist then it is not required to comply with any of the compliances under this law being not a taxable person.
Boon to agriculturist
From the reading of the existing Model GST law it conveys that once a person is an
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th the law intended by the draftsman. It is possible that by the time final GST law would be at its place, this anamoly which does not seem to be intent of law would be overcome and only agricultural operations carried out by agriculturist would be kept outside the purview of model GST law.
This is just for your reference. It does not constitute our professional advice or recommendation.
Reply By SWAMINATHAN RAMANATHAN as =
Sir,
Does it mean the Fertilizer and Pesticides also exempted from GST.
Kindly clarify the position of Fertiliser and Pesticides products in GST.
Dated: 12-8-2016
Reply By CA Akash Phophalia as =
Fertilizers and pesticides are not covered in the definition of agriculuture.
Therefore as per current model law in force, these are taxable.
However, as the law is going to change when it is in its final phase and rules, exemptions and related laws are yet to come, it may be possible that fertilizers and pesticides are exempted or may be charged to tax at a low
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