The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman, chaired the 55th Goods and Service Tax (GST) Council meeting in Jaisalmer, Rajasthan on December 21, 2024.
The GST Council addressed key taxation issues relating to the taxation of spices such as black pepper and raisins. The GST council decided to exempt black pepper and raisins, also known as kismis, from Goods and Service Taxes (GST) when they are sold directly by agriculturists.
GST Expertise: Essential Questions, Key Judgments & Practical Guide
This, however, does not apply to the sale of these items by manufacturers or registered establishments, and they will continue to attract a GST of 5% if unpackaged and 18% is packaged. The decision was taken on the expectation that such an exemption would relieve the farmers and smoothen the trade practices for these products.
Under existing rules, many agricultural products were already exempt from GST when sold by farmers in their natural or raw form. Processed and semi-processed items, which include spices and dried fruits, attract GST and lead to a lot of confusion and compliance burden for the sellers. The council clarifies that even though they go through a bit of processing like cleaning and drying, black pepper and raisins will not attract any GST if sold directly by the farmers or agriculturalists.
GST Expertise: Essential Questions, Key Judgments & Practical Guide
This could benefit small and marginal farmers relying primarily on spices and dried fruits as cash crops. This GST exemption is expected to reduce costs and make these products more competitive in the local and export markets.
The officials who attended the meeting clarified that this move aligns with the government’s policy of minimising taxation on essential agricultural produce while promoting business opportunities for farmers.
The meeting was attended by Union Minister of State for Finance Shri Pankaj Chaudhary; the Chief Ministers of Goa, Haryana, Jammu and Kashmir, Meghalaya, and Odisha; the Deputy Chief Ministers of Arunachal Pradesh, Bihar, Madhya Pradesh, Rajasthan, and Telangana; as well as the Finance Ministers of various States and Union Territories. Senior officials were also present, including the Secretary of the Department of Revenue, Chairpersons and Members of CBIC, and other key representatives from the Ministry of Finance.
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