India’s GST Council has revised the tax regime for farmers and agriculture, placing most agri-linked items in the new 5% slab from September 22, 2025, resulting in substantial savings for both farmers and the general public. The policy aims to reduce cultivation costs, boost mechanization, and make essentials, especially food and dairy, more affordable for households.
Key Changes in GST for Agriculture
Recent GST reforms have shifted farm machinery, inputs, and processed agricultural goods to the lowest 5% slab. Tractors (below 1800 cc), their parts, irrigation equipment, bio-pesticides, fertilizers, and processed foods now incur 5% GST instead of previous rates of 12% or 18%. Dairy products, such as packaged milk, paneer, ghee, and cheese, have also seen significant tax cuts.
Benefits to General Public
- Improved Nutrition: Tax cuts on dairy and processed foods ensure better access to protein and micronutrients for all families.
- Boost to Rural Economy: Cheaper farm equipment means lower cultivation costs, higher productivity, and potential reduction in food prices, benefitting consumers and supporting India’s rural economy.
- Environmental Gains: Reduced rates on bio-pesticides, composting machines, and modern irrigation promote sustainable farming, providing long-term public health and ecological benefits.
- Lower Prices: Everyday items including soaps, toothpaste, packaged foods, and dairy products will become more affordable, improving the cost of living for households.
Direct Savings for Farmers and Public under New GST Slabs
| Item / Service | Old GST Rate | New GST Rate | Direct Saving for Farmers & Public |
| Tractors (below 1800 cc) | 12% | 5% | 7% cheaper – Lower cost of mechanization |
| Tractor Tyres / Parts | 18% | 5% | 13% cheaper – Reduced maintenance costs |
| Irrigation Equipment (Drip / Sprinklers) | 12% | 5% | 7% cheaper – Affordable modern farming tools |
| Fertilizer Raw Materials (Ammonia, Sulphuric Acid) | 18% | 5% | 13% cheaper – Lower fertilizer production cost |
| Finished Fertilizers | 5%–12% | 5% | Up to 7% cheaper – Stable farm input prices |
| Composting Machines | 12% | 5% | 7% cheaper – Boosts organic farming access |
| Processed Fruit & Vegetable Products | 12% | 5% | 7% cheaper – More affordable food for public |
| Dairy (Milk, Paneer, Cheese, Ghee) | 12% | 5% | 7% cheaper – Cheaper nutrition for families |
| Fish & Shrimp Products | 12%–18% | 5% | 7–13% cheaper – Helps farmers and exporters |
Enjoyable New Benefits
- Mechanized farming and modern agri-tech are now within reach for smallholders and cooperatives.
- Lower input costs help keep food inflation in check, making staple foods cheaper across India.
- Households can now enjoy a more nutritious diet at reduced cost, with milk and dairy essentials taxed less.
The GST reforms for farmers and agriculture provide direct financial relief to cultivators and ripple effects of affordability, nutrition, and rural development for the general public.
