Why Arecanut Sector Wants GST Reduction for Copper Sulphate
Arecanut farmers and traders are demanding GST relief on copper sulphate, citing its essential use in agriculture and crop protection. This demand has grown louder as GST authorities classify it under higher tax slabs meant for industrial chemicals — raising both costs and compliance confusion in the sector.
What is Copper Sulphate Used For?
- Fungicide: Controls fungal diseases in arecanut palms
- Pesticide component: Used in Bordeaux mixture with lime
- Soil conditioner: Helps control algae and fungi in waterlogged fields
- Agri-input: Common in many plantation crops beyond arecanut
Key Point: Copper sulphate is not a luxury chemical but a critical farm input.
Current GST Rate on Copper Sulphate
| Classification | GST Rate | Description |
|---|---|---|
| Industrial use | 18% | Generic chemical classification |
| Agri-inputs | 5% | If classified under fertilizer use |
Notification Reference:
- Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017
- Schedule I & IV for chemical classifications
Why the Sector is Protesting
- Input Cost Spike: GST @18% increases cultivation cost by ₹2,000–₹3,000/acre
- Classification Confusion: Same product, different rate depending on use
- No ITC Benefit: Small farmers are unregistered and can’t claim ITC
- Policy Inconsistency: Urea and other agri-inputs enjoy 5% GST
Expert View: Practical Suggestion
Tax expert insight:
“GST law allows rate differentiation based on usage. Copper sulphate should be notified as a farm input when used for agri purposes. A specific clarification by CBIC will help avoid field-level disputes.”
Legal Standpoint: Can the Rate Be Changed?
- Section 11 of CGST Act allows exemptions and reduced rates via notification
- CBIC has issued product-specific rate clarifications in the past
- Recent High Court cases (like Gujarat HC’s fertiliser GST dispute) show courts can intervene if classification harms farmers
What the Sector Demands
✅ Classify copper sulphate under agri-inputs when used in plantations
✅ Issue a CBIC circular to avoid field-level misinterpretation
✅ Consider seasonal exemption like in urea, DAP, etc.
✅ Extend GST amnesty if past demands are found unjustified
Frequently Asked Questions (FAQs)
Q1. What is the GST rate on copper sulphate for agri use?
Currently 18%, but the sector demands 5% if used as pesticide/fertilizer input.
Q2. Can GST vary based on use?
Yes. CBIC classifies goods differently for industrial vs. agri use.
Q3. Has the government reduced GST on similar items before?
Yes. Several agri-chemicals have been moved to the 5% slab based on usage.
Q4. What is the role of Notification 1/2017 in this context?
It governs GST rates for goods; revisions or exemptions are issued under it.
Summary
Arecanut growers demand GST reduction on copper sulphate from 18% to 5%, citing agricultural use. Misclassification hikes costs and affects small farmers. CBIC clarification needed.
Final Word: GST Reform Must Include Farmers
The copper sulphate issue highlights a larger GST challenge — usage-based classification without field-level clarity creates real compliance pain. Farmers shouldn’t be taxed like industries. It’s time for CBIC to issue a much-needed clarification.