In a country where income from agriculture is tax-free, more than half of the country is dependent on agriculture and mechanised agriculture has recently arrived, the Central Board of Indirect Taxes and Customs (CBIC) has put a clarification that laterals/parts that are to be used uniquely or principally with sprinklers or drip irrigation system shall attract 12% GST rate 
Earlier, There was chaos over the rate of tax applicable on Drip Irrigation System or parts of Sprinklers when they are supplied as a separate piece i.e. not supplied with entire sprinklers or drip irrigation system. Considering the various representations received by the Board on this issue, the GST Council in a meeting that was held on 28th May 2021 discussed the aforesaid matter in detail and recommended that the Government should provide clarity on the above-mentioned issue.
The GST circular mentioned that the tax rate on Drip Irrigation System or Sprinklers along with their parts/laterals are administered by S.No. ‘195B’ under Schedule II of notification bearing number 1/2017- Central Tax (Rate) and dated 28th June 2017.
“The intention of this entry has been to cover laterals (pipes to be used solely with sprinklers/drip irrigation system) and such parts that are suitable for use solely or principally with ‘sprinklers or drip irrigation system’, as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN”.
“Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which are classifiable under heading 8424, would attract a GST of 12%, even if supplied separately. However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN (Harmonised System of Nomenclature), shall attract GST as applicable to the respective heading, the circular said.”
