No GST on Agricultural Land used for cultivation of rubber: AAR

The Vaniampara Rubber Company Limited (applicant) has filed an advance ruling dated May 19, 2025. The company holds a registered address at XXI/1423, Vazhakala Buildings, Kottaya-686001 with GSTIN no. 32AABCT0058M1ZG.

The applicant is a company involved in the cultivation of rubber registered under the CGST Act and carries 356.1232 hectares of vacant land on a perpetual lease from the erstwhile former Cochin State (now the Government of Kerala) for rubber plants.

Questions raised by the applicant

The applicant, Vaniampara Rubber Company Limited, has asked the following questions, seeking the Kerala Authority for advance ruling on goods and services tax department (Advance Ruling No. KER/20/2025).

Question 1: Whether the quit rent/lease rent paid to the Kerala Government on the land used for agricultural purposes (rubber plantation) should be classified under SAC Heading 9986 or 997212?

Question 2: Whether lease rent collected by the government through the Forest Department is exempted from GST vide Heading 9986 of Notification 12/2017-Central Tax (Rate)?

Answers Given by Ruling

Following answers have been given by Kerala Authority to the above asked questions-

Answer 1: No. The quit rent/lease rent paid to the Kerala Government on land used for agricultural purposes should be classified under SAC 9986 (services by the government relating to agricultural activities) Therefore, GST at 18% under SAC 997212 does not apply.

Answer 2: Yes, the lease rent collected by the government through the Forest Department is exempt from GST under Heading 9986, as per Entry No. 54 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. This exemption applies to services relating to the cultivation of plants or agricultural produce on leased vacant land, with or without a related building for such use.