GoM reviewing GST on farm equipment and inputs: FM Nirmala Sitharaman

Delhi, Mar 25, 2025

Says existing provisions under I-T Act have gaps in addressing digital data

A proposal to reduce goods and services tax (GST) on agricultural equipment and inputs is being reviewed by a Group of Ministers (GoM), Union Finance Minister Nirmala Sitharaman on Tuesday said in the Lok Sabha.

Responding to queries on the Finance Bill, 2025, Sitharaman said that a proposal to lower GST on farm inputs, including tractors, drip irrigation systems, fertilisers, and pesticides, to zero was discussed in the 45th GST Council meeting on September 17, 2021, but could not be agreed upon at the time. “Now the Group of Ministers is looking into it, so the items will be looked at by the GoM and they will take a call,” she added. The Lok Sabha later passed the Finance Bill, 2025.

Sitharaman explained the GST structure for agricultural items. “Seeds attract zero GST. There is 5 per cent GST on fertilisers, agricultural implements, and manuals, manually operated or animal-driven. And hand tools attract zero GST, and tractors attract 12 per cent. Agricultural pumps too attract 12 per cent GST,” she said.

She said the average GST rate had come down to 12.2 per cent from 15 per cent at the time of its introduction.

The finance minister defended including digital elements in the Income-Tax Bill, 2025, stating that existing provisions under the Income-Tax Act, 1961, primarily referred to physical records, leaving a gap in addressing digital data.

“A provision to look at the data exists in the current environment, particularly in certain cases of search and seizure authorised by a competent authority. Now, it has been specifically mentioned in the new Income-Tax Bill because the 1961 Act does not account for digital records,” she said.

Citing instances where digital evidence had helped unearth tax evasion, she said: “Unaccounted money of ₹250 crore was detected when encryption was decoded. Evidence from WhatsApp messages revealed crypto transactions worth over ₹90 crore and a bogus billing syndicate worth ₹200 crore.” She also highlighted how Google Map history helped trace locations linked to unaccounted transactions, and Instagram was used to establish ownership of high-value assets.

Sitharaman also informed the Lok Sabha the government’s “nudge campaign” encouraging taxpayers to voluntarily disclose foreign assets and income had yielded significant results.

Recalling a 2018 announcement by former finance minister Arun Jaitley regarding global information-sharing agreements, Sitharaman said India now received data on foreign accounts held by Indian residents.

As part of this initiative, SMS and emails were sent to 19,501 select taxpayers, prompting 11,162 of them to revise their income-tax returns and disclose foreign assets worth ₹11,259.29 crore and foreign income of ₹154.42 crore. Additionally, 883 taxpayers corrected their residential status from “resident” to “non-resident”.

The ripple effect of this campaign led to 13,516 more taxpayers declaring foreign assets worth ₹7,564 crore and foreign income of ₹353 crore, she said.

Cumulatively, the initiative resulted in 30,161 taxpayers declaring foreign assets, worth ₹29,208 crore, and foreign income of ₹1,089 crore in their revised filings for 2024-25, Sitharaman said.

Citing a study by the National Institute of Public Finance and Policy (NIPFP), she said: “Most consumer items face low GST rates or none at all. Less than 3 per cent of common consumption items attract the highest rate of 28 per cent.”

She also highlighted nearly 60 per cent of consumption items fell under the 5 per cent or lower GST bracket and listed essential goods and services such as unbranded food items, certain life-saving drugs, health care, education, public transport, sanitary napkins, and agricultural services were exempt from GST.

She spoke of reforms to reduce litigation, including higher monetary limits for tax appeals, new posts of joint commissioners for appeals, and the government’s Vivaad Se Vishwas dispute resolution schemes in 2020 and 2024.

Going digital to fill gaps

- ₹250 crore uncovered after decoding encrypted data

- WhatsApp messages revealed crypto transactions worth over ₹90 crore

- ₹200 crore bogus billing syndicate identified through WhatsApp chats

- Instagram used to establish beneficial ownership of expensive vehicles

- Google Maps history helped track frequent locations

[The Business Standard]