Agriculture sits on GST’s exemption edge, which makes it one of the most misunderstood sectors. A farmer selling their own produce is outside GST — but the traders, commission agents and processors around them often are not, and getting that line right is the whole job.
What is exempt
The supply of unprocessed agricultural produce by a cultivator (farmer) of their own produce is outside GST — a farmer selling their harvest doesn’t register or charge GST. Many basic, loose, unbranded staples also carry a nil rate. This is the exemption that keeps most primary agriculture out of the net.
Where traders and agents become liable
The picture changes for the trade around the farm. APMC traders and commission agents (arhtias) dealing in agricultural produce, and anyone selling pre-packaged and labelled staples, generally fall within GST. Commission agents in particular need to look at their turnover and the nature of their supply, and certain agricultural goods attract reverse charge. This is exactly where honest, case-specific advice matters — some agents must register, others need not.
Branded vs unbranded, and processing
- Loose/unbranded staples: often nil-rated; pre-packaged and labelled: taxable
- Processing (flour mills, oil mills, cleaning/grading businesses): usually taxable output
- Commission agents: registration depends on turnover and supply type
- Reverse charge applies to certain notified agricultural goods