Karnataka Farmers Appeal for GST Exemption on Agricultural Equipment and Loan Relief

A delegation of Karnataka sugarcane farmers recently met with Union Finance Minister Nirmala Sitharaman and demanded that GST on necessary agricultural equipment and materials used in farming be exempted. A memorandum was presented to the Minister by a delegation led by the State Sugarcane Cultivators’ Association, summarizing all the problems faced by farmers in relation to the increased cost of production brought about by GST.

As indicated in the memorandum presented by the association, the increased percentage of GST on inputs and agricultural equipment has raised the costs of production and further intensified pressure on farmers’ finances. For the past several years, the association has repeatedly appealed to both the state and central governments to abolish the GST on these items, arguing that this would ease the financial burden on farmers. The government still hasn’t provided an adequate response to the appeal from the farmers.

It was clarified at the meeting that GST does not apply to equipment used only for agricultural purposes, though it is imposed if that equipment is used for non-agricultural purposes. To date, farmers continue to press for a full exemption to make production expenses more manageable.

Moreover, the farmers’ memorandum also demanded delinking CIBIL credit scores from eligibility criteria for agricultural loans. The vagaries of weather and natural events often prevent farmers from repaying loans on time, which affects their CIBIL scores and subsequently impacts their access to future loans. According to farmers, loan eligibility should not be linked with CIBIL scores because agriculture is an unpredictable business.

The memorandum further discussed the takeover of agricultural land by financial institutions through the SARFAESI Act when there are defaults in loan repayment. The farmers felt that this happens due to circumstances beyond their control, not by intention, and proposed that agricultural land be exempted from the SARFAESI Act altogether.

Additionally, the delegation expressed disappointment that MAT was imposed on Farmer Producer Organizations (FPOs). They said that the additional burden of taxation limits financial support further and requested the government to grant a 10-year exemption.

Union Finance Minister Nirmala Sitharaman addressed students at Karnataka State Open University, Mysuru, as she inaugurated Mysuru Sangeetha Sunganda, the cultural festival jointly organized by the Union Ministry of Tourism and the Union Ministry of Culture.