An unequal burden -Harish Damodaran

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published Published on Sep 26, 2019   modified Modified on Sep 26, 2019
-The Indian Express

Farmers are paying about Rs 15,000 crore GST annually, on which they cannot claim input tax credit.

Agriculture is a unique business that not only has high production as well as price risk, but also one where everything is bought retail and sold wholesale. This reality, moreover, extends even to Goods and Services Tax (GST): Farmers are the only businessmen today who cannot claim input tax credit (ITC) on the sales they make.

Bhagirath Choudhary, founder-director of the New Delhi-based South Asia Biotechnology Centre, was recently shocked to pay 18% GST on pheromone traps and lures that are used by farmers to attract insect pests. “These are required for monitoring and trapping of adult male moths to prevent mating and laying of eggs by the females. We advise spraying of chemical pesticides only as a last resort, when the number of moths caught exceeds a certain threshold level” says the 45-year-old, whose agri-technology dissemination organisation claims to have reached out to nearly 15,000 maize farmers across India and distributed 2,500 traps-cum-lures as part of an educational programme to control the dreaded fall armyworm pest.

But 18% GST is levied not just on traps and dispensers impregnated with synthesised mimics of sex-attractants released by female insects. Even regular agro-chemicals/pesticides and safety kits (eyewear, masks and gloves) necessary to spray these attract this duty. The GST rates are slightly lower, at 5-12%, for botanical and biological insecticides such as Azadirachtin, Nomuraea rileyi, Metarhizium anisopliae and nuclear polyhedrosis virus formulations, which are also used at very early stages of infestation.

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The Indian Express, 26 September, 2019,

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