Union Government Slashes GST on Tractors and Farm Equipment to 5% Under Next-Gen GST Reform

In a major boost for the agricultural sector, the Union Government has unveiled a sweeping GST reduction as part of the Next-Gen GST Reform. The GST rate on tractors, essential farm machinery, bio-pesticides, micro-nutrients, drip irrigation systems, sprinklers, and tractor tyres has been cut to just 5%, offering direct financial relief to farmers across the country.

This reform extends to a broad spectrum of agricultural equipment, including:

• Soil preparation and cultivation machinery
• Harvesting and threshing machines
• Straw and fodder balers
• Grass and hay mowers
• Composting equipment

Cleared by the GST Council, this decision is part of a wider reform package aimed at reducing input costs and strengthening key sectors of the economy. For agriculture, it represents one of the most significant tax relaxations since the introduction of GST, paving the way for lower cultivation costs and faster adoption of modern technologies.

Prime Minister Narendra Modi called the move a “festive relief” for farmers and citizens. He highlighted its positive economic impact.

What Does This Mean for Farmers?

• Biggest relief: Tractors and machinery previously taxed at 12% will now attract only 5% GST.
• Water-efficient farming: Drip and sprinkler systems reduce water usage from 12% to 5%, promoting sustainable irrigation practices.
• Greener inputs: Bio-pesticides and micro-nutrients are now taxed at 5%, promoting eco-friendly farming.
• Cheaper upkeep: Tractor tyres and parts see a sharp reduction from 18% to 5%, lowering maintenance costs.

This reform is referred to as a “gift for every Indian.” It shows the government’s promise to focus on farmers in its tax plan. It fits with the larger goal of Aatmanirbhar Bharat. This goal is to make Indian agriculture better, more sustainable, and cheaper.

This reform is important. It provides lower costs for inputs. It also offers better access to modern tools. Additionally, it gives a timely boost before the Rabi season.