The Tractor Manufacturers’ Association (TMA) has said that the proposed GST rate of 28 per cent for tractor components will lead to an increase in input cost by ₹25,000 per tractor.
The Association has requested the government to reduce the duty for all tractor components to 18 per cent from 28 per cent.
Downward revision of GST is limited to token components of a tractor while major aggregates and components such as engines, transmissions and other parts will continue to be levied at 28 per cent.
Tractors, which so far attracted nil final duty, will now have a GST of 12 per cent. TMA has requested changing component duties in tractors from the proposed 28 per cent to 18 per cent. Some tractor components were included in the list of 66 items for which the Finance Minister announced a revised GST rate of 18 per cent.
However, it is observed that in implementation, with the inverted duty structure of input tax of 28 per cent and output of 18 per cent, the relief provided is marginal, and The rise in the input cost per tractor could have an impact on industry working capital to the extent of ₹1,600 crore, according to a statement of TMA.
“We are requesting the revenue department to reduce duty on all components that go into the manufacture of tractors from 28 per cent to 18 per cent, upholding the statement of the Finance Minister in letter and spirit,” Mallika Srinivasan, Chairman and CEO of TAFE said in a statement.
In addition to the above, while the transitional provisions in respect of stocks held at depots and dealerships are extended to all industries, the tractor industry, despite having an embedded tax rate of eight per cent, is not eligible for this relief because tractors were in the exempted category till now.
Tractors like automobiles can be identified by serial numbers and hence the exact duty paid can be arrived at. Hence, tractors should be treated at par with other products of such nature and should not be discriminated.
The industry always holds more than 1.5 lakh tractors in stock in depots and dealerships, denial of this relief will severely impact the farming community, the statement pointed out.