GST Council Slashes Tax Rates on Dairy, Fertilisers, and Farm Equipment; Relief from September 22

New Delhi, September 4, 2025 – The Goods and Services Tax (GST) Council, in its 56th meeting headed by Union Finance Minister Nirmala Sitharaman, has given its go-ahead to drastic rate reductions across the fertiliser and dairy product as well as farm machinery sectors, giving much-needed relief to farmers and consumers in time for the festive season.

Dairy Products Made More Affordable

The Council has exempted Ultra High Temperature (UHT) milk and paneer, effective from the GST rate being reduced from 5% to zero. Also, condensed milk, butter, other fats, and cheese will attract GST at only 5%, lowered from the previous 12%.

Major Cuts for Agriculture and Fertilisers

Various farm inputs and equipment have been covered under lower slabs:

• Farm equipment like diesel engines up to 15HP, drip irrigation nozzles, sprinklers, harvest and soil preparation equipment, threshers, compost machines, and tractors (excluding heavy semi-trailer tractors) will now be levied 5% GST, down from 12%.
• The lower rate is also extended to self-loading agricultural trailers and hand-propelled carts.
• Major fertilizer inputs like sulphuric acid, nitric acid, and ammonia will now have 5% GST, down from 18%.
• Several biopesticides such as Bacillus thuringiensis, Trichoderma varieties, neem pesticides, and NPV strains have also been reclassified to the 5% category.
• Micro-nutrients of the Fertiliser Control Order, 1985, will also be taxed at 5%.

Tractor Parts and Components Get Relief

Various tractor-related components, such as rear tyres, tubes, hydraulic pumps, gearboxes, radiators, brake assemblies, and other essential elements, will now attract only 5% GST, down from 18%.

Effective from September 22

The changes will be effective from September 22, 2025, reducing the input cost for farmers and making the necessary dairy items more affordable for consumers. Industry leaders have applauded the decision, noting that lower GST on dairy and farm essentials will enhance affordability for consumers while boosting rural incomes and making India’s farm economy stronger.

Disclaimer: At HDFC SKY, we take utmost care and due diligence in curating and presenting news and market-related content. However, inadvertent errors or omissions may occasionally occur.

If you have any concerns, questions, or wish to point out any discrepancies in our content, please feel free to write to us at content@hdfcsec.com.

Please note that the information shared is intended solely for informational purposes and does not make any investment recommendations