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12% GST applicable on parts used in drip irrigation systems

  • Jun 24, 2021 | Avalara

  • The CBIC has issued a circular clarifying applications on whether or not lateral parts of sprinklers or drip irrigation systems are taxable.
  • This clarification comes after a recommendation made by the GST council in the 43rd GST council meeting.
  • 12% GST is applicable on lateral parts used in sprinklers or drip irrigation systems.

In a circular issued by the Central Board for Indirect Taxes and Customs (CBIC), the board announced a clarification with regard to concerns on the taxable rate for parts used in irrigation systems.

The CBIC has responded to several applications seeking clarity on the taxable rate on parts of sprinkles or drip irrigation systems when the same is supplied separately and not along with entire sprinklers or drip irrigation system. After a recommendation by the GST council, the CBIC has issued a circular clarifying the tax rate.

The circular issued by the CBIC stated that “the GST rate on Sprinklers or Drip Irrigation System along with their laterals/parts are governed by S.No. ‘195B’ under Schedule II of notification No. 1/2017- Central Tax (Rate), dated 28th June, 2017. The intention of this entry has been to cover laterals (pipes to be used solely with with sprinklers/drip irrigation system) and such parts that are suitable for use solely or principally with ‘sprinklers or drip irrigation system’, as classifiable under heading 8424 as per Note 2 (b) to Section XVI to the HSN. Hence, laterals/parts to be used solely or principally with sprinklers or drip irrigation system, which are classifiable under heading 8424, would attract a GST of 12%, even if supplied separately. However, any part of general use, which gets classified in a heading other than 8424, in terms of Section Note and Chapter Notes to HSN, shall attract GST as applicable to the respective heading.”

A tax rate of 12% is applicable on lateral parts of sprinklers or drip irrigation systems that are solely purchased for sprinkles or drip irrigation systems.

Avalara helps businesses of all sizes get GST return filing, e-way bill generation and e-invoicing right with cloud-based GST compliance solutions in India. Goods and Services Tax (GST) rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
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