The Government of India is all set to implement the new Goods and Service Tax (GST) from July 1, 2017. The new taxation system brings bad news for the farmers of the country.
With the implementation of the GST, the tractor prices might go up by around Rs 25,000 because of the huge difference between the input and output tax.
The Tractor Manufacturers' Association (TMA) has requested the government to reduce the tax levied on the tractor components to 18 percent from 28 percent. The new GST rate will apply to token components.
The other major parts such as engine, transmission and other components will attract a tax of 28 percent. The tractors will be levied with a tax of 12 percent. So, there is a wide difference between input and output tax rates.
Chairman and CEO of TAFE (Tractors and Farm Equipment Limited), Mallika Srinivasan said, "Unfortunately this (the GST) has only been partially rolled out and the increase in input cost stands at Rs 25,000."
Source: Business Standard
The GST brings one common taxation policy on all the goods, which is a welcome move. But it also has adverse effects on the auto industry. For example, the hybrid cars will also cost more compared to the conventional cars. So, this has to be sorted out before the roll out of new tax rates.