Overview
For many years, Indian farmers struggled with numerous problems like high costs of tractors, tools, and fertilizer inputs. Again, adding taxes to this burden again making modern farming expensive and cutting into profits. To eliminate this pressure, the Government of India, in the 56th GST Council Meeting 2025 chaired by the Union Finance Minister, announced GST 2.0 reforms.
The new GST rates 2025 came into effect on 22nd September 2025, directly reducing the cost of essential agricultural products and inputs. Earlier, GST on agricultural equipment and GST for agricultural machinery ranged from 12% to 18% on tractors, spare parts, irrigation systems, and harvesting tools. This meant that every purchase from a tractor, tyre to a set of sprinklers became more costly. For medium as well as small farmers these high rates often lead to delayed investments or dependence on manual labour.
Now, with reduced 5% GST, farming has become more affordable. This new GST benefit really helps farmers to save money, to invest in better agricultural equipment, and improve productivity.
GST Reforms for Agriculture
| Details | Old GST Rate | New GST Rate (5%) |
|---|---|---|
| Tractors (<1800 cc) | 12% | 5% |
| Tractor components (Tyres, tubes, hydraulic pumps etc.) | 18% | 5% |
| Sprinklers, Drip Irrigation, Threshing/Harvesting Machinery | 12% | 5% |
| Diesel engines (<15 HP), Compressor | 12% | 5% |
| Fertilizer inputs (Ammonia, Sulphuric Acid, Nitric Acid – raw materials) | 18% | 5% |
| Bio-pesticides (12 categories) | 12% | 5% |
| Micronutrients & Bio stimulants under Fertilizer Control Order | 12% | 5% |
| Solar power-based devices | 12% | 5% |
New GST Benefits for Farmers
- Lower GST on farm equipment, tractors will make mechanization more affordable for farmers.
- GST on tractors (below 1800 cc) has been reduced from 12% to 5%
- The reduction of GST on fertilizers in India from 18% to 5% helps correct the inverted duty structure, reduces raw material costs for fertilizer companies, and prevents price hikes for farmers.
- Lower GST on bio-pesticides promotes farmers to adopt sustainable, natural, and environment-friendly farming methods.
- Enhanced efficiency and productivity in harvesting, watering, and planting.
- Farmers' livelihoods can be directly improved by reinvesting savings into family necessities, fertilizer, or seeds.
Conclusion
New GST 2025 rates are boon to farmers. Taxes are reduced on tractors, irrigation equipment, bio-pesticides, harvesting machinery, and solar devices, farmers can now access better technology at reduced costs.
This reform not only encourage the financial burden but also supports farm mechanization, sustainable agriculture, water conservation, and renewable energy adoption. It is obvious indication of the Government's commitment to Empowering farmers and building a future-ready agriculture sector.