Goods and services tax was introduced in 2017 which replaced all other central taxes like excise duty, customs duty, services tax, and state taxes like VAT, entry tax, entertainment tax, etc. It is the only tax we have to pay to the government.
Agriculture is a major sector that contributes largely to the Indian economy upto 16% and any changes to it will affect our economy and GDP growth rate. Let’s see what effect GST has on the Indian agricultural sector.
Let us take a look at the tax rates of foodgrain purchases in few states of India post and prior to GST
By looking at these figures, we can understand how effective and beneficial GST has proven to be to farmers, manufacturers, traders, and the entire agricultural industry. We can witness drastic changes in the tax rates and tremendous decreases which will have a direct impact on the growth of the agricultural sector.
Now, let us look upon the cost of agricultural items and the impact
TAX RATE under GST
Increased farming cost
Increased farming cost
This will tell us how the farming cost has got increased due to GST and it should be borne by farmers.
NATIONAL AGRICULTURAL MARKET (NAM)
NAM is a scheme introduced by the central government to reduce the problems faced by agriculturalists and traders during the buying and selling of agricultural products. NAM acts as an online platform and makes it easy to trade commodities online at reasonable prices.
After GST was introduced, NAM was also successful as it was very useful to both farmers and traders, and also to the government to monitor the transactions and the whole agricultural market.
NAM made it easier for the movement and transportation of agricultural commodities across India.
Most of the indirect taxes as mentioned earlier being levied on agricultural products have been cut down, which benefits the growers, traders, and also the middlemen.
Farmers and traders can also claim an input tax credit (ITC) on these products.
GST has also been problematic in some ways such as the prices of agricultural equipment, tractors, fertilizers, pesticides, plastic pipes, irrigation material, etc have gone up and it, in turn, increases farming costs and the farmers will have to face financial problems.
In conclusion, the introduction of Goods and Services has a positive effect on the agricultural sector. It makes a single tax system for to the whole country and also helps the farmers and traders to sell their products in all parts of the country and at the best prices. It would not be wrong if we say that GST has been a strong factor responsible for the growth of the Indian agricultural industry along with the establishment of the National Agricultural Market it has led to fair trade and smooth functioning of the agricultural activities.