SPRINKLER AND DRIP IRRIGATION SYSTEM INCLUDING LATERIALS WILL ATTRACT 12% GST
The Goods and Services Tax
Act, 2017 came into force with effect from 1.7.2017 in India.
The Central Government has clarified that all
goods falling under HS 8424, namely, Mechanical appliances (whether or not
hand-operated) for projecting, dispersing or spraying liquids or powders; spray
guns and similar appliances; steam or sand blasting machines and similar jet
projecting machines (other than fire extinguishers, whether or not charged),
were placed under 18% slab. Subsequently, on the recommendation of the GST
Council, the item namely, ‘Nozzles for drip irrigation equipment or nozzles for
sprinkler was placed under 12% GST slab (Entry No. ‘195A’ with effect from
22.09.2017). Upon revisiting the issue of GST rate on micro irrigation
including drip irrigation system, including laterals the GST Council
recommended 12% GST rate on micro irrigation system, namely, sprinklers, drip
irrigation system, including laterals. Accordingly, the said entry 195B was
inserted in the notification No. 1/2017- Central Tax (Rate).
The Central Government has also clarified
that the micro irrigation, sometimes called „localised irrigation‟, „low volume
irrigation‟, or „trickle irrigation‟ is a system where water is distributed
under low pressure through piped network, in a pre-determined pattern, and
applied as a small discharge to each plant or adjacent to it. The traditional
drip irrigation using individual emmitters, subsurfaces drip irrigations (SDI),
micro-spray or micro-sprinkler irrigation, and mini bubbler irrigation all
belong to the catgeory of micro irrigation method.
Thus the term “sprinklers”, in the said entry
195B, covers sprinkler irrigation system. Accordingly, sprinkler system
consisting of nozzles, lateral and other components would attract 12% GST rate.
The relevant Circular No.81/2018-GST dated 31.12.2018
is given below for ready reference.
F.No.354/408/2018-TRU
Government
of India
Ministry of Finance
Department
of Revenue
(Tax Research Unit)
*****
Circular
No. 81/55/2018-GST
North Block, New Delhi,
Dated,
31st December, 2018
To
Principal
Chief Commissioners/ Principal
Directors General,
Chief Commissioners/ Directors General,
Principal
Commissioners/
Commissioners
of GST and Central
Tax (All),
Madam/
Sir,
Subject: Clarification regarding GST tax rate for Sprinkler and Drip Irrigation
System including
laterals–reg.
Representations have been
received seeking
clarification
as regards the scope and coverage of
entry No. 195B of the Schedule II to notification No. 1/2017- Central Tax (Rate), dated
28.06.207. The entry No. 195B was inserted
vide notification No. 6/2018- Central Tax
(Rate), dated 25th January, 2018 and reads
as below:
S. No
|
Chapter
Heading/ Sub- heading/Tariff
Item
|
Description of
Goods
|
CGST
rate
|
195B
|
8424
|
Sprinklers;
drip irrigation system
including laterals;
|
6%
|
2. Doubts have arisen as in certain cases a view has been taken in the field that this entry
would not cover “laterals of
sprinklers” and “sprinklers
irrigation system”,
while laterals of
drip irrigations are covered
by
this entry.
3. The matter has been examined. Initially, with effect from 1.7.2017,
all goods falling
under HS 8424, namely,
Mechanical appliances
(whether or not hand-operated)
for projecting, dispersing or spraying liquids or powders; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines (other than fire
extinguishers, whether or not charged), were placed under 18% slab. Subsequently, on the
recommendation of the GST Council,
the item namely, ‘Nozzles for drip
irrigation equipment
or nozzles for sprinkler
was placed under 12% GST slab (Entry No. ‘195A’ with effect from
22.09.2017). Upon revisiting
the issue of GST
rate on micro irrigation
including drip
irrigation system, including laterals the GST Council recommended 12% GST rate on micro
irrigation system, namely, sprinklers, drip irrigation system, including laterals. Accordingly,
the said entry 195B was inserted in the notification No. 1/2017- Central
Tax
(Rate).
3.1 The micro irrigation, sometimes
called „localised irrigation‟, „low volume irrigation‟, or „trickle irrigation‟ is a
system where water is distributed under
low pressure through piped network, in a pre-determined pattern, and applied as a small discharge to each plant
or adjacent to it. The traditional drip irrigation using individual emmitters, subsurfaces drip irrigations (SDI), micro-spray or micro-sprinkler irrigation, and mini bubbler irrigation
all belong to the catgeory of micro
irrigation method.
4. Therefore, the term “sprinklers”, in the said entry 195B, covers sprinkler irrigation system. Accordingly, sprinkler system consisting of nozzles, lateral and other components
would attract 12% GST rate.
5. Difficulty, if any, may be brought to the notice of the Board immediately. Hindi
version shall follow.
Yours faithfully
Gunjan Kumar Verma
Under Secretary (TRU-I)