As per the Government of India, the recent GST rationalisation shall deliver growth to cooperatives engaged in dairy, food processing, agriculture, and rural enterprises. The Union Minister of Cooperation Amit Shah, in a written reply to the Rajya Sabha, has shared the information.
Dairy Sector to Gain from Lower GST
The GST rate on milk and paneer has been made nil, and the tax on butter, ghee, cheese, and milk cans has been reduced to 5% from 12%.
From the Ministry, such revision shall-
- Make dairy products more competitive
- Increase demand
- Enhances revenues for dairy cooperatives
- Benefits dairy farmers across the country
Food Processing Cooperatives to See Higher Demand
A 5% GST is levied on most food items, which is lower compared to the previous 12-18%. Items like jams, jellies, fruit pulp, juices, chocolates, cornflakes, ice creams, pastries, cakes, and biscuits are covered under the reduction.
Ministry stated that the reduced costs shall seem to drive higher demand, enhancing the revenues of food-processing cooperatives.
Lower Input Costs for Agriculture Cooperatives
GST has been reduced from 18% to 5% on the fertiliser inputs such as ammonia, sulphuric acid, and nitric acid, and there is only 5% GST on bio-pesticides and micronutrients.
Read Also: GST Impact on the Agriculture Sector in India
Also, the GST has been lowered on tractors below 1800cc and various tractor components.
Such revisions are expected to
- Reduce fertiliser prices
- Ensure timely availability of affordable inputs
- Promote a shift from chemical to bio-pesticides
- Improve soil health and crop quality
- Benefit small farmers, FPOs, and rural enterprises
Higher Incomes for Farmers and SHGs
The Ministry, reduced GST rates will allow cooperative products to compete better with unorganised sector goods, boosting market share and consumer trust.
Enhanced margins are anticipated to be passed on to members via higher procurement costs. For instance, at present, dairy farmers obtain nearly 80% of the consumer price, which is predicted to rise to around 85% after GST rationalisation.
The measures are possible to motivate women-led self-help groups (SHGs) and informal producers to join cooperative networks, enhancing income opportunities across states and UTs.
Read Order
