Absentee landlords, food processing firms brought under GST net

AGRICULTURE DEFINITION REVISED

WHILE EXPANDING the definition of agriculture to include dairy, poultry and stock breeding, the Goods and Services Tax (GST) Council last month declined entry of individuals leasing out farmland on rent or share cropping as agriculturist, thereby bringing absentee landlords and food processing companies hiring land for farming under the proposed indirect tax net.

Asperthedefinitionagreedatthecouncil’s fifth meeting on December 2-3, agriculture would include floriculture, horticulture, sericulture, pisciculture, raising of crops, grass or garden produce, grazing, dairy, poultry, stock breeding,piggery,apiculture,themerecutting of wood or grass, gathering of fruit, collection of minor food produce, raising of man-made forest or rearing of seedlings or plants.

But the Council stood steadfast on the definition of agriculturist to allow only individuals or a Hindu Undivided Family (HUF) who carry out farming on their own or by family members; by servants on wages payable in cash or kind; or, by hired labour under one’s personal supervision or the personal supervision of any member of one’s family.

Exemptiontoagriculturistswouldhaveimplied tax relief to a person, while exemption to products like dairy and poultry provide tax relief to the products.

The Council retained its proposed definition of ‘agriculturist’ to allow a land to have been personally cultivated only if it’s farmed by individuals and family members of a HUF. Similar dispensation would be given to serving member of the armed forces, widows, minorsorpeoplewithphysicalormentaldisability even when land is cultivated by servants or hiredlabour.thecouncil’srefusalcamedespite requestsbyseveralstates,includinglargefarming ones like Punjab and Haryana.

It declined Punjab’s suggestion to add a sub-clause for inclusion of agricultural operation through any usufructuary, mortgage or lease or otherwise and to include cooperative societieswithinthemeaningofagriculturist.it, however,agreedtoconsiderthestate’srequest for exempting lease of agricultural land from service tax when it exemptions under GST come up for discussion at a later stage.

While Telangana suggested that the definition should not be limited to those who cultivate the land personally as small landholders might give their land to other ryots, Haryanasaidthatnorestrictionsshouldbeput and even contract farming should be allowed since landholdings were small.

Delhiclaimedthattenancywasquitecommon in India and to make them taxable under GST would be a very big decision which neededtobediscussed.butgujaratstatedthat a company that entered into a tenancy agreement should get registered and pay GST, adding that if tenancy was illegal in a state, it could not be legalised in GST.

GST Council retained its proposed definition of ‘agriculturist’ to allow a land to have been personally cultivated only if it’s farmed by individuals and family members of a HUF

Nirmal Harindran SBI Chairman Arundhati Bhattacharya (right) with SBI Managing Director Rajnish Kumar during the press briefing on interest rates and effects of demonetisation at SBI Bhavan in Mumbai on Monday.