Revised draft model Bill clearly says an agriculturist for the purpose of agriculture won't be liable for registration under GST.
Many definitions of agriculture are likely to come up in the wake of the revised draft model GST Bill which was placed in the public domain on Saturday.
This is because the revised draft has not made any major change to in its definition of ‘agriculture’ or ‘agriculturists’ for the purpose of taxation, leaving the door open for interpretation of the law.
All eyes would now be on the list of items to be exempted under GST, as that would make it clear as to whether farm goods produced through any process remains fully outside the ambit of GST.
The revised draft model Bill clearly says an agriculturist for the purpose of agriculture won’t be liable for registration under GST. An ‘agriculturist’ is one who cultivates land personally for the purpose of ‘agriculture’.
Cultivating personally, according to the revised draft, would mean an agriculture operation carried out by a person’s or his family’s labour. It includes farming done through hired labour under the supervision of the person or his family.
‘Agriculture’ is further clarified as an activity that includes floriculture, horticulture, sericulture, the raising of crops, grass or garden produce and also grazing but not dairy farming, poultry farming, stock breeding, the mere cutting of wood or grass, gathering of fruit, raising of man-made forest and rearing seedlings or plants.
The definitions for the purpose of taxation and also the exclusions point two things.
First, broadly, agriculture and farming are excluded from GST but there are a lot of open-ended questions and ambiguities which either the GST Council or the Centre will have to clarify in the days to come.
Tax expert Satya Poddar says, if agriculturists include those who cultivate land personally or through hired labourers, then they would come under GST when the final law is passed.
But, the law provides another avenue that if such agriculture is done through hired labourers, it won’t come under the strict definition of ‘agriculturists’.
Poddar notes most big farmers or landlords who allow share-cropping in their land either allow the tenant right over a portion of the produce as wages or give them bonus in the form of wages.
The second issue, according to him, is that items like dairy farming, poultry, etc, have not been included in the definition of agriculture.
In the absence of a formal exemption list, the taxman can argue these items are not in the list and, hence, taxable.
Ajay Vir Jakhar, president of Bharat Krishak Samaj, says there does not seem much change in revised draft model GST Bill from the earlier version and the apprehension of farmers over the exclusion of farming activities such as poultry or dairy has not been adequately addressed.
“The various concerns raised by farmers and others with the finance ministry and with the agriculture ministry need to be addressed adequately to clear all apprehensions about the impact of GST on agriculture,” said Jakhar.
Photograph: Mukesh Gupta/Reuters.
