Know All About Top Impacts Of GST On Agricultural Exports

The implementation of the Goods and Services Tax (GST) in India has had significant impacts across various sectors of the economy, including agriculture. GST, introduced on July 1, 2017, replaced multiple indirect taxes and aimed to create a unified tax structure for the country.
The GST has had a mixed impact on the agriculture industry, affecting farmers, traders, agribusinesses, and the sector's overall expansion. Understanding these key impacts is crucial for assessing the transformative changes brought about by GST and identifying areas for further improvement and development within the agriculture sector.

The following are the different impacts of GST on agricultural exports:-

Streamlined Tax Structure

GST replaced multiple indirect taxes such as Value Added Tax (VAT), excise duty ( a tax that is charged on the production of goods in its own country), and service tax, bringing uniformity and simplification to the tax structure. This streamlined system has reduced the compliance burden on agricultural exporters, leading to increased efficiency in operations.

Elimination of Cascading Taxes

Agriculture products were subject to many taxes at various points along the supply chain under the old tax system. As a result, additional taxes were required and collected on top of existing ones, a process known as cascading taxation. The idea of cascading taxes has been eliminated with the introduction of the GST, saving agricultural exporters money.

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Input Tax Credit (ITC)

GST allows registered businesses to claim an input tax credit on their purchases. Agricultural exporters can avail of ITC on inputs such as fertilizers, seeds, machinery, and transportation. Because of the decreased overall tax burden, agricultural exports are now more competitive on the international market.

Increased Compliance and Formalization

The agricultural export industry has seen a rise in formalization and compliance all because of GST. The participation of unregistered and informal players has been discouraged because exporters must be registered under GST to gain benefits. As a result, there is now more responsibility and openness in the industry.

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Logistics and Transportation Costs

GST has streamlined the movement of goods across state borders by eliminating inter-state entry taxes. However, challenges related to logistics and transportation infrastructure persist. Delays at check posts, complex documentation requirements, and inadequate transportation facilities can impact the timely delivery of agricultural exports, affecting their quality and market value.

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