Laghu Udyog Bharati – Gujarat, a prominent industry body, is spearheading a critical campaign to reduce the Goods and Services Tax (GST) on submersible pumps, urging a drop from the current 18% to a more farmer-friendly 5%.
The association emphatically points out that over 90% of submersible pumps (categorized under HSN: 84137010) are indispensable for the agricultural sector, primarily for irrigation and providing essential drinking water. Despite this overwhelming agricultural use, the GST Council currently classifies these pumps for ‘industrial use’. This classification, the association argues, is fundamentally flawed, as these pumps are specifically designed for extracting water from borewells in rural areas and have virtually no industrial application.
Historically, submersible pumps were taxed at a modest 2% before the Value Added Tax (VAT) regime, which then saw a slight increase to 5%. However, with the advent of GST, these vital pieces of agricultural machinery were initially placed in the 12% slab, and since 2022, have been burdened with a hefty 18% GST. This is a stark contrast to most other agricultural inputs and machinery, which have been thoughtfully rationalized to the 5% tax bracket, making the current high rate on submersible pumps detrimental to the financial well-being of farmers.
A reduction in GST would not only significantly lower irrigation costs for farmers but also lead to a remarkable improvement in farm productivity. Furthermore, it would free them from reliance on more expensive and less efficient alternatives, directly supporting the backbone of the nation’s economy.