Who is an Agriculturist for the purpose of GST?

Filed Under: GST


As per Central Goods And Services Tax Act (CGST) 2017, an agriculturist is any individual or Hindu Undivided Family (HUF) in the occupation of cultivation of land, either on his own labour or by the labour of family or by the labour of servants on wages payable in cash or in kind or by hired labour, under personal supervision or supervision of any member of the family.

gst on agriculture

(7) “agriculturist” means an individual or a Hindu Undivided Family who
undertakes cultivation of land—
(a) by own labour, or
(b) by the labour of family, or
(c) by servants on wages payable in cash or kind or by hired labour under
personal supervision or the personal supervision of any member of the family;

Is an agriculturist liable for registration under CGST 2017?

An agriculturist, to the extent of supply of produce out of cultivation of land, shall not be liable to registration under Central Goods And Services Tax Act 2017. This is laid down in Section 23 1(b) of the Act. Thus, such persons shall not be liable to GST to the extent of turnover from such cultivation of land.

23. (1) The following persons shall not be liable to registration, namely:––

  • (a) any person engaged exclusively in the business of supplying goods or
    services or both that are not liable to tax or wholly exempt from tax under this Act or
    under the Integrated Goods and Services Tax Act;
  • (b) an agriculturist, to the extent of supply of produce out of cultivation of land.

Are supplies of produce out of cultivation of land taxable?

Supplies of produce out of cultivation of land is not taxable in the hands of an agriculturist as defined in the CGST Act 2017. However, supply of agricultural produce made by a trader or any other person who is not an agriculturist, shall be a taxable supply, though they may be nil rated under GST. Nil rated or zero rated goods or services mean the tax rate applicable on such goods or services is 0%.

Will the value of supply of produce out of cultivation of land be included in computing aggregate turnover within the meaning of CGST 2017?

If a person is engaged in supply of goods or services or both, other than the supply of produce out of cultivation of land, our view is that the value of supply of agricultural produce shall not be considered for computing aggregate turnover. This is because, Section 23(1)(b) of CGST 2017 does not lay down that only an agriculturist who is exclusively engaged in cultivation of land shall be exempt from registration under the act. On the contrary, it lays down that an agriculturist is not liable for registration to the extent of supply of produce out of cultivation of land, meaning such supply will not be considered in computing his aggregate turnover for determining his liability to registration.

Will an agriculturist include a person engaged in supply of produce out of cultivation of leased land?

Central goods and Services Act 2017 does not lay down that the agriculturist shall own the land being cultivated. Thus if an individual or HUF is engaged in cultivation of leased land and in the supply of produce from such land, then he shall still be considered an agriculturist for the purpose of CGST Act 2017 and he shall not be liable for registration under the Act, to the extent of such supply.

Thus, ownership of land is not essential. It is not necessary that the cultivator be also the owner of the land. He could be a tenant or a sub-tenant of the land cultivated by him.

Can a private or public limited company or a partnership firm engaged in cultivation of land be called an agriculturist?

No, a company or a partnership firm cannot be called an agriculturist. Only an individual or HUF engaged in cultivation of land can be called an agriculturist within the meaning of CGST ACT 2017. Thus, they are liable for registration if their aggregate turnover, including turnover from supply of produce out of cultivation of land, exceeds the threshold limit of twenty lakh rupees(ten lakh rupees in the case of a few special category states) in any financial year.

Can a person who receives rent by leasing out agricultural land for cultivation purposes be termed an agriculturist?

No, such an individual or HUF cannot be called an agriculturist within the meaning of CGST Act 2017. Only persons engaged in cultivation of land shall be called an agriculturist for the purpose of this Act. Therefore, any person receiving rent for leaning out agricultural land, shall be liable for registration if their aggregate turnover exceeds rupees twenty lakhs (ten lakh rupees in the case of a few special category states) in any financial year. Such rental receipts are also liable for GST at the rate of 18% i.e. CGST of 9% and SGST of 9%.

Can a person receiving rent or any other income or receipt from a farm house be termed an agriculturist?

A person receiving rent or any other income from a farmhouse adjoining any agricultural land can be an agriculturist only if he is also engaged in cultivation of land. But such rental income, or receipts of any other nature, in respect of the farmhouse, shall not be regarded as agricultural revenue or receipts for the purpose of CGST Act 2017. Therefore, such receipts will be included in determining the aggregate turnover, for ascertaining liability to GST registration. Moreover, such receipts will be liable to GST at the rate of 18%, in respect of a registered person.

Will revenue or receipts from sale of seeds, saplings, live plants and trees grown in a nursery be considered as agricultural receipts in the hands of any individual or HUF engaged in the business of running such nursery?

No, such receipts shall not be regarded as agricultural receipts or revenue or receipts arising from supply of produce out of cultivation of land. Hence, such supply will be a taxable supply for the purpose of GST. However, live plants and trees (HSN code – 06) and a few seeds (for example, seeds used for sowing) are nil rated meaning the rate of GST applicable on such supply is 0%.

Can an Individual or HUF engaged in dairy farming or poultry farming be called an agriculturist for the purpose of GST?

Dairy farming, poultry farming or any other farming activity which does not involve cultivation of land is not considered as agricultural activity for the purpose of CGST Act 2017 and hence persons engaged in such activities cannot be called as agriculturists. Hence, supply of produce from dairy farming or poultry farming is liable to GST, unless such produce are nil rated or zero rated i.e. GST rate on such supply is 0%. Such persons are liable to GST registration, if their annual turnover exceeds rupees twenty lakhs (rupees ten lakhs in special category states).

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