What's Happening?
The GST Council, chaired by Union Finance Minister Nirmala Sitharaman, announced significant tax reductions for the agriculture and dairy sectors. The council's decision led to a surge in stock prices for companies like Parag Milk Foods and Dodla Dairy, which saw increases of up to 7%. The tax cuts include making Ultra High Temperature (UHT) milk and paneer tax-free, reducing GST on condensed milk, butter, and cheese from 12% to 5%, and slashing GST on key fertiliser inputs from 18% to 5%. The council also reduced GST on various agricultural machinery and biopesticides, aligning with the government's agenda for next-generation GST reform.
Why It's Important?
These tax cuts are expected to ease costs for farmers and consumers, potentially boosting the agricultural and dairy sectors. By reducing GST rates, the government aims to make the tax regime more efficient and growth-oriented, which could lead to increased investment and expansion in these industries. The move reflects a broader overhaul of the GST structure, which may have long-term implications for economic growth and sectoral development.
What's Next?
The new GST rates will come into effect on September 22, and stakeholders in the agriculture and dairy sectors are likely to monitor the impact on their operations and profitability. The government may continue to evaluate the effectiveness of these reforms and consider further adjustments to support economic growth.
