sReduction of GST on Agricultural Equipment
The proposal to reduce the GST on agricultural equipment and inputs is currently under review by a Group of Ministers (GoM). The Union Finance Minister, Nirmala Sitharaman, mentioned this in the Lok Sabha while discussing the Finance Bill, 2025.
In the 45th GST Council meeting on September 17, 2021, a proposal to lower GST on farm inputs to zero was discussed but not agreed upon. The GoM is now tasked with reviewing this proposal.
Current GST Structure for Agricultural Items
- Seeds: Zero GST
- Fertilizers, agricultural implements, and manuals: 5% GST
- Hand tools: Zero GST
- Tractors and agricultural pumps: 12% GST
The average GST rate has decreased from 15% to 12.2% since its introduction.
Inclusion of Digital Elements in Income-Tax Bill, 2025
The finance minister defended the inclusion of digital elements in the Income-Tax Bill, emphasizing the need to address digital data, which the Income-Tax Act, 1961, does not cover.
Digital evidence has been crucial in uncovering tax evasion cases:
- Unaccounted money of ₹250 crore was detected through encryption decoding.
- WhatsApp messages revealed crypto transactions worth over ₹90 crore and a bogus billing syndicate of ₹200 crore.
- Google Maps history and Instagram were used to trace locations and establish ownership of high-value assets.
Nudge Campaign for Voluntary Disclosure
The government's "nudge campaign" encouraged taxpayers to disclose foreign assets and income, resulting in significant disclosures:
- 19,501 taxpayers received SMS/emails, prompting 11,162 to revise their returns and disclose foreign assets worth ₹11,259.29 crore and foreign income of ₹154.42 crore.
- 13,516 taxpayers declared foreign assets worth ₹7,564 crore and foreign income of ₹353 crore.
- Cumulatively, 30,161 taxpayers declared foreign assets worth ₹29,208 crore and foreign income of ₹1,089 crore.
GST Rates on Consumer Items
A study by the National Institute of Public Finance and Policy (NIPFP) highlights that most consumer items face low GST rates:
- Less than 3% of common consumption items attract the highest rate of 28%.
- Nearly 60% of consumption items fall under the 5% or lower GST bracket, including essential goods and services like unbranded food items, life-saving drugs, health care, education, public transport, and agricultural services.
Reforms to Reduce Litigation
The government has implemented reforms to reduce litigation, such as:
- Higher monetary limits for tax appeals.
- New posts of joint commissioners for appeals.
- Vivaad Se Vishwas dispute resolution schemes in 2020 and 2024.