New Delhi: As the winter crop sowing season gathers pace, the government has notified changes to goods and services tax (GST) rules that could offer relief to farmers.
According to finance ministry notifications issued on 27 October, the measures include a 5% tax rate on retreaded tractor tyres and clarification on the tax treatment of certain fertilizers and seaweed-based products. The changes, which will take effect from 1 November, could help reduce the tax burden on some agricultural inputs.
The changes also include new tax compliance requirements for businesses dealing in used cooking oil, plastic waste, discarded tyres, metal scrap and electronic waste.
Quick answers to key questions
GST on retreaded tractor tyres falls from 18% to 5% from 1 November. The lower rate is intended to make these more affordable for farmers.
No. The 5% rate applies to retreaded tractor tyres only. Other retreaded or used rubber tyres, including tyre treads and flaps, continue to attract 18% GST.
Seaweed-extract-based biostimulants fall within the 5% GST category for pre-packaged and labelled animal, vegetable and organic fertilizers if they are registered under the specified fertilizer control order.
The registered business purchasing specified goods, including used cooking oil, plastic waste, discarded tyres, metal scrap and electronic waste, must pay GST under the reverse-charge mechanism.
Eligible businesses registered in one state may use an e-commerce operator’s warehouse as their principal place of business to register in another state, even without a physical presence there. The facility requires the operator’s consent and is subject to a monthly output tax liability limit of ₹2.5 lakh on specified sales to registered buyers.
The notification follows recommendations made at the 57th GST Council meeting in New Delhi on 8 October. Mint had reported these proposed changes on 15 October.
Cheaper tractor tyres, fertilizers
Under the revised rules, GST on retreaded tractor tyres will drop from 18% to 5%, while other retreaded or used rubber tyres, including tyre treads and flaps, will continue to attract 18% GST. Retreading involves repairing a worn tyre by replacing its outer tread, allowing it to be used again. The move is expected to benefit small and marginal farmers who prefer to buy used or retreaded tyres as they are cheaper.
“A reduction in GST on retreaded tractor tyres is a welcome step, as small and marginal farmers often look for ways to reduce the cost of maintaining farm machinery. Retreaded tyres are generally a more affordable alternative to new ones, and a lower tax rate could improve their affordability,” said Rakesh Arrawatia, professor at the Institute of Rural Management Anand (IRMA) and dean of the School of Cooperative Banking and Finance.
According to the latest available agriculture census data (2015-16), India had 126 million small and marginal operational holdings. Of these, 100.2 million were marginal holdings (less than one hectare), while 25.8 million were small holdings (one to two hectares).
The government has also clarified the tax treatment of certain fertilizers. The 5% GST category for pre-packaged and labelled animal, vegetable and organic fertilizers will include seaweed-extract-based biostimulants, provided they are registered under the specified fertilizer control order. Biostimulants are products used to enhance nutrient efficiency and support crop growth.
The notification also specifically includes psyllium seeds, commonly known as isabgol, in the relevant GST rate schedules. However, the notification does not by itself establish a new tax rate for the product.
In addition, the government has introduced changes to the way GST is handled in transactions involving certain types of waste and scrap, including used cooking oil, plastic waste, discarded tyres, metal scrap and electrical and electronic waste.
Under the updated reverse-charge mechanism, registered businesses purchasing these specified goods from unregistered suppliers must pay the tax themselves, shifting the payment responsibility from seller to buyer. For purchases of these listed goods between registered businesses, a separate rule applies. Specified buyers must now deduct tax at source (TDS) and deposit it with the government.
The notifications also remove GST registration exemptions for businesses dealing in these specified categories of waste and scrap. Suppliers of these goods are no longer exempt and must now register under the relevant GST rules.
Cross-border online sales
In a separate change aimed at easing compliance for small online sellers, the government has allowed eligible businesses registered in one state to obtain GST registration in another state where they have no physical presence by using an e-commerce operator’s warehouse as their principal place of business.
The facility is subject to certain conditions, including consent from the e-commerce operator and a monthly output tax liability limit of ₹2.5 lakh on specified sales to registered buyers. The operator must respond to the consent request within seven working days. The change could make it easier for small sellers to store and sell goods through online marketplaces across state borders without setting up a physical business location in each state.
In addition, the government has expanded e-invoicing rules to cover service imports and supplies bought from unregistered sellers under the reverse-charge mechanism. To give businesses time to adjust to the new compliance requirements, this change will take effect on 1 January 2027.
“The latest changes seek to make registration more responsive, refunds faster and accumulated credits more accessible, while progressively moving tax administration towards system-driven processes. Simplified interstate registration through e-commerce operator warehouses could lower the entry barrier for smaller sellers looking to expand across states,” said Manoj Mishra, partner and tax controversy management leader at Grant Thornton Bharat.
About the Author
Dhirendra Kumar
Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.
Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.
Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.
