Top Tractor News

The Goods and Services Tax (GST) is possible to hit manufacturers of tractors and finally farmers who buy them. Now total tax on The inputs and accessories of a tractor is of 17.5% (central value added tax (Cenvat) of 12.5% plus state VAT of 5%). About 70% of the inputs that go into making a tractor bought locally and the rest from outside the state of manufacture/assembly. Excepting Cenvat, a 2% central sales tax is imposed upon inter-state purchases resulting in an effective tax of about 13.7%.

The effective tax would jump to 19.6% (tax for about 70% of the inputs), with inputs and accessories of tractors being brought in the 28% slab under GST. Tractors have been brought under the 12% tax slab in GST. This means that tractors would be taxed at 12% while the gearbox, hydraulic pumps, metal parts and forgings in the same would attract 28% levy.

Manufacturers can charge only 12% out of the effective tax of 19.6% for inputs, parts and accessories to the customer and claim the rest only as a refund from the government.

Officials said a manufacturer using material worth Rs 7 crore would have to wait for a refund of about Rs 40 lakh. "Our profit margins, which are only 8%-9%, will be completely wiped out."

This is a big blow to the tractor spare parts, attachments and implements manufacturers. This will ultimately affect farmers.As per the new list of GST, goods falling under 'HS Code- 8708' or 'parts and accessories of motor vehicles' are charged 28%.

Source: http://timesofindia.indiatimes.com