GST on Agriculture products by registered person

[Tijo Joseph]

My client is religious trust registered under 12A of Income Tax Act. trust is also registered under GST act as it is having rental income. trust is also having an estate from which they produce cashew, pepper, rubber and they sell it in the primary market without any further processing. My doubt is that whether trust need to discharge output GST for the sale of the above products as i found there is tax rate of 5% for the above products or whether trust can claim the benefit of agriculture produce and get exempt from GST liability.

[Shilpi Jain]

For identifying the rate of tax for goods the relevant notification will have to be referred. In this case Notification No. 1/2017-Integrated Tax (Rate) and NOTIFICATION NO. 10/2025-CENTRAL TAX (RATE)

There is no specific exemption given here or any where else in the law for agri produce. So no exemption will be applicable to the trust

[Sadanand Bulbule]

Registration of a religious trust under Section 12A of the Income-tax law does not automatically grant GST exemption.

For GST purposes, if the trust cultivates cashew, pepper, rubber, etc., on its own estate and sells them in the primary market without any processing beyond normal agricultural operations (like drying, cleaning, or basic grading), such supplies qualify as agricultural produce and are generally exempt from GST.

However, if these products are commercially processed (e.g., cashew kernels, pepper powder, processed rubber), GST at applicable rates would apply. 

 

[YAGAY andSUN]

Registration under Section 12A of the Income-tax Act does not grant any automatic exemption under the GST law. The liability under the Central Goods and Services Tax Act, 2017 depends on the nature of supply and the classification of goods.

Under Section 2(7) read with Section 2(1A) of the CGST Act, “agriculturist” means a person who cultivates land personally or through labour. Further, as per Notification No. 2/2017-Central Tax (Rate), supply of fresh agricultural produce which does not undergo any processing other than such processing as is usually done by a cultivator to make it marketable in the primary market is exempt from GST. Therefore:

• Raw cashew nuts (unshelled), pepper, and rubber (natural latex/sheet rubber) sold in primary form without processing beyond drying, cleaning, or grading would qualify as agricultural produce and are exempt from GST.

• However, if cashew kernels (shelled), processed/graded/branded pepper, or processed rubber are supplied, they generally fall under taxable headings (often 5% or as notified), and GST would be payable.

Accordingly, if the trust itself cultivates the land and sells the produce in primary, unprocessed form in the primary market, it can claim exemption as supply of agricultural produce and no output GST is payable. If there is any processing beyond what is ordinarily done by a cultivator to make it marketable, the exemption will not apply and GST must be discharged at the applicable rate.

AI Summary

GST treatment of agricultural produce: primary-market sales by the cultivator exempt, commercial processing attracts GST per notifications. Registration under section 12A does not confer GST exemption; exemption depends on the supply's character. Fresh agricultural produce sold by the cultivator in the primary market without processing beyond ordinary operations (drying, cleaning, basic grading) qualifies as agricultural produce and is exempt from GST, whereas commercially processed products (such as shelled cashew kernels, processed pepper, or processed rubber) are taxable at the notified rates.