C

1) Major Tax Reforms in Indiai. Traditional Tax Regime,ii. Value Added Tax Regime, andiii. Good & Service Tax Regime

2) Agriculture Sector Prior to GST Regime

3) Goods and Service Taxi. Meaning of GST and Rational for itii. Working Model of GST in INDIAiii. Tax Rate Under GSTiv. Illustration of working of GST model (With a hypothetical

example)v. Features of GST

4) Implications of GST on Agricultural SectorA) On agro-input industriesB) On investments in agro-processing industriesC) On agricultural outputD) On logistic and transportationE) On international trade

5) Some International Experiences in GST

Outline of Presentation

CONCEPTS

IMPLICATIONS

Frequently Used Terms in Seminar

VAT : Value Added Tax GST : Goods and Service Tax Input Tax Credit / Set off : Credit obtained against payment of taxes on

inputs Octroi / Entry Tax : Entry tax levied by local bodies/states Excise Duty : Tax on the volume of the quantity produce Custom Duty : Tax on the import of goods MODVAT : Modified VAT CENVAT : Central VAT Compliance : Easiness/ Simplicity in filing tax returns Cascading Effect : Tax on Tax Zero Rated Goods/ Services : No tax on goods/services but ITC is admissible Exempted Goods/Services : No tax on goods/services & no ITC Traditional Tax Regime : Excise & Sale Tax Regime Existing Tax Regime : VAT Regime RNR : Revenue Neutral Rate

Existing Tax Structure in India

TAX ATION

Direct Tax Indirect Tax

Wealth Tax

Others, like- Entertainment tax

Entry Tax Luxury Tax

Lottery Tax

State VAT/Sale Tax

Central Excise Duty

Service Tax

Custom Duty

Income Tax

Levied by Centre

Levied by State Source: An Insight of Goods & Services Tax (GST) in India,2015

Basics of Indirect Taxation

INDIRECT TAX??

Meaning: Indirect taxes are those whose burden can be shifted to others so that those who pay these taxes to the government do not bear the whole burden but pass it on wholly or partly to others.

Indirect taxes are levied on production and sale of commodities and services.Example: Excise duties on the manufactured products, sales tax, service tax, customs duty, tax on rail or bus fare, Octroi duty/ Entry tax, entertainment tax etc. are some examples of indirect taxes.

Levied by:1. Central Govt.: Excise, Service

Tax, Custom Duties2. State Govt.: State VAT, Sale Tax, Entertainment Tax, Octroi/ Entry Tax, Purchase Tax etc.

1950

-51

1960

-61

1970

-71

1980

-81

1990

-91

2000

-01

2005

-06

2010

-11

2014

-15

01020

2.095.8111.09 11.5717.78

Tax to GDP Ratio

Direct tax Indirect tax Total tax

Perc

ent

Importance of Indirect Taxation

Source: Indian Public Finance Statistics, 2014-15

199200200201201201

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%100%

Share of Direct & Indirect Tax in Total Revenue

Direct TaxIndirect TaxOthers

Tax Jurisdiction of Centre and State in Different Tax Regime

Tax Regimes Central Levies State LeviesExcise- Sale Tax Regime Central Excise Duty

(On Manufacturing)Sale Tax(On Distribution Chain)

Value Added Tax Regime CENVATService Tax

State VAT/ Local body Taxes

Goods and Service Tax Regime

CGST and IGST SGST

Based on Presenters understanding of concepts from various literatures on Indirect Taxes in India

Major Indirect Tax Regimes in India

Traditional Tax Regime

Value Added Tax Regime

Goods & Service Tax

Regime

Major Taxes: Indirect taxes including customs and excise. Revenue from indirect taxes was the major source of tax revenue. Cascading effect of taxation

Introduced by Maurice Laure, a French economist, in 1954.Introduced in India in 2005.The burden of tax is borne by the final consumer.Eliminates the cascading effect of traditional tax regime.Made tax structure simple, hassle free and export oriented.

A single comprehensive tax levied on goods and services consumed in an economy.

levied at every stage of the production-distribution chainAlso known as Harmonized Sales Tax (HST).First devised by a German economist during the 18th century.Concept appeared first time, in 2006-2007 Union Budget Speech in India.

Source: 1) Goods and service Tax: A Global Experience 2) Based on Presenters understanding of concepts from various literatures on Indirect Taxes in India.

Evolution of Indirect Taxes in India

Mauryan PeriodEXCISE DUTY on liquor, Salt, Sugar, Leather, Cloth & Dairy Products

Britisher’sEXCISE DUTY on liquor, Salt, Sugar, Leather, Cloth & Dairy Products

& Cotton

Widening of Excise Base

(1917-1943)Coffee, Tea, Betel Nut

Central Excise Act- 1944

Value Added TaxApril 1st ,2005

GST

Widening of Tax Base#

MODVAT1986

#- Based on Presenters understanding of concepts from various literatures on Indirect Taxes in India

We R Here

Current Structure of Indirect Taxes in India

TYPES BASE No. of Rates

Rates (%) Description of Commodities

Standard Lower Exempted Lower Rate Higher Rate

GOODS

CENTRE (Excise) Manufacturing 8 12.0 6.0 Food

Textile, Mobile Phones,

Fertilizers. Some Intermediate

goods

Tobacco, Petroleum Products,

Automobiles, Aerated Water

STATE(VAT) Up to Retail 3+ 12.5-14.5 4-5.5

Goods of local

Importance

Intermediates; Capital goods,

Gold & precious metals

Alcohol, Petroleum, Tobacco

SERVICES

CENTRE Positive List 11 12.4 4.1

Education, Health, Public

Services

Construction, Work Contract,

Restaurant, transport, Life

Insurance

-

STATE - None None - - - -Source: Report on the Revenue Neutral Rate and Structure of Rates for the Goods and Services Tax, 2015

Coconut Oil, Sattu(Kerala) (Bihar)

Extension Service

Treatment of Agriculture Sector in Traditional Tax Regime

FARM PRODUCTS: Fresh Agricultural produce, Fibers, Livestock Products, Fishery etc. are Exempted for taxation.

AGRO INPUTS: Agro-Chemicals - VAT + CST Seeds - Exempted from VAT

AGRO-PROCESSED COMMODITIES: Packaged food: VAT + CSTDinning Out: VAT + Service Tax

Apart from these indirect taxes, all these commodities attracts some local taxes like -Octroi/Entry Tax

Under the current tax system:- The Union excise duties and State VAT applies

to all capital goods, Input tax credits are generally limited to

manufacturing plant and equipment. No input tax credit is allowed for the State VAT on

capital goods acquired by the service sector (e.g., telecommunications, “transportation”, “finance”, “insurance”, and IT services).

Source: Report on the Revenue Neutral Rate and Structure of Rates for the Goods and Services Tax, 2015

Cont…

INVESTMENT IS DISCOURAGED

High cost of capital goods

Discourages the free movement of goods across

state borders

Two per cent (2%) CST on inter-state sales of goods

Incremental costs of logistics and warehousing at multiple locations. Inefficiencies in supply chain

Services relating to agriculture by way of –(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing;(ii) supply of farm labour;(iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations

which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;

(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;(v) loading, unloading, packing, storage or warehousing of agricultural produce;(vi) agricultural extension services;(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.Services related to agriculture by way of –

(i) Agricultural operations directly related to production of any agricultural produce;

(ii) Supply of farm labour;

(iii) Processes carried out at an agricultural farm which do not alter essential characteristics of agricultural produce but make it only marketable for the primary market;

(iv) Renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;

(v) Loading, unloading, packing, storage or warehousing of agricultural produce;

(vi) Agricultural extension services;

(vii) Services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce.

Exempted Agricultural Services from Service Tax in India

The replacement of the single- point state sales taxes by the VAT in all of the states and union territories

Reduction in the central sales tax rate to 2%, from 4%, as part of a complete phase out of the tax

The introduction of the service tax by the centre, and a substantial expansion of its base over the year’s, and

Rationalization of the CENVAT rates by reducing their multiplicity and replacing many of the specific rates by ad valorem rates based on the maximum retail price (MRP) of the products

Major Indirect Tax Reforms in India

Source: Poddar S. and Ahmed E., 2009

Goods and Service Tax

Traditional Vs VAT Regime (Hypothetical Example)Traditional Regime

Supply Chain Cost of Input

Value of Output

Tax Rate

Selling Price Including Tax Rate

Tax Burden

Producer 100 150 10% 165(150+ 10% of 150) 15

Wholesaler 165 180 10% 198(180 + 10% of 180) 18

Retailer 198 220 10% 242(220 + 10% of 220) 22

Value Added Tax (VAT) RegimeSupply Chain

Cost of Input

Value of Output

Value Added

Tax Rate

Selling Price Including Tax Rate

Tax Burden

Producer 100 150 50 (150-100) 10% 155

(150+ 10% of 50) 5

Wholesaler 155 180 25 (180-155) 10% 182.5

(180 + 10% of 25) 2.5

Retailer 182.5 220 37.5 (220-182.5) 10% 223.75

(220 + 10% of 37.5) 3.75

Price Paid By Consumer = Rs. 242Price Received By Producer= Rs. 150Gross Margin in Supply Chain= Rs. 37Producers Share in Consumer Rupee= 61.98%TOTAL TAX BURDEN ON CONSUMER = Rs. 55

Price Paid By Consumer = Rs. 223.75Price Received By Producer= Rs. 150GVA in Supply Chain= Rs. 112.5Producers Share in Consumer Rupee= 67.03%TOTAL TAX BURDEN ON CONSUMER = Rs. 11.25

Net Amount Paid = Rs. 709Gross TAX Paid = Rs. 139.23Actual Price of Goods= Rs. 570

Real Life Example of Cascading Effect and Multiple Taxationin Existing Tax Regime

Value of Goods Consumed = (180+265+125)= Rs. 570TAXES:Service Charge @5% on 570 = Rs. 28.50VAT @ 12.5% on (570+28.50) = Rs. 74.81Service Tax @ 5.6% on 570 = Rs. 33.52Swatchh Bharat Cess @ 0.2% = Rs.1.20Krishi Kalyan Cess @ 0.2% = Rs.1.20GROSS TAX PAID = Rs. 139.23

NET AMOUNT PAID = 570 + 139.23 = Rs.709

MULTIPLICITY OF TAXATION

Tendency to escape / evade the tax liabilities. As production and sales continue, the tax burden increases – Govt. tax revenue will decline

Non- Uniformity in tax rates at different stages of production,– Increased administrative cost and lack of transparency

Less competitiveness in the domestic as well as international market.

Households are subjected to heavy tax burden

Flaws in Traditional & Existing Tax Structure

Sale Tax Regime

Exclusion of many taxes from CENVAT & SVAT.(ACD, Surcharges , Luxury tax, entertainment tax etc)

Incomplete consideration of value added chain (VAC below manufacturing was not accounted)

Most of the politically sensitive services are not subsumed Treatment of goods and services differently Difference in tax base across the states Cascading Effect Prevails (CENVAT load in SVAT) Autonomy of Centre in taxation of services

VAT Regime

Source: First Discussion Paper on Goods and Services Tax In India, 2009

Multiplicity of Tax and Tax Rates

Cascading Effect

Lack of ComplianceMAJOR FLAWS Exclusion of

Services

Input Tax Credit only for limited

Goods

Complex Tax Structure

Source: First Discussion Paper on Goods and Services Tax In India, 2009

Cont…

Tax Structure

Direct Tax

Income Tax

Wealth Tax

Indirect Tax

Intra- State

CGST (Central)

SGST (State)

Inter State

IGST (Central)

Proposed Tax Structure in India

Source: www.taxguru.com

Goods and Service Tax (GST)

Picture Courtesy: A Primer on Goods and Service Tax in India, 2011

Concept of Goods and Service Tax

GST is not VAT plus Service Tax

ButImprovement over

VAT1. Broader Tax Base2. Consideration of complete value added

chain3. Concurrent Power of taxation on all the

transactions4. Dilution of concept of goods and services

and emphasis on “Supply”5. Equal treatment of goods and services

Picture Courtesy: A Primer on Goods and Service Tax in India, 2011#- Understanding of presenter from various literature on GST

What these Improvements are?#

Rational for Goods and Service Tax

1. In Indian Constitution, taxes upon goods and services can be classified under three lists, namely

a) Union List - Railway, Postal Services etc

b) State List – Land, agriculture etc.

c) Concurrent List - Trade and commerce in food stuffs

Mutually Exclusive Categories

Overlapping of Central and State Taxes

i.e. (CENVAT + State VAT)

2. Taxing service sector is practically difficult in VAT regime

VAT

Central Excise Duty >>

Additional Excise Duty >>

Service Tax >>

Countervailing Duty >>

Special Additional Duty of Customs >>

<< St

ate V

AT/S

ale Ta

x

<< En

terta

inmen

t Tax

<< Central Sa

le Tax

<< Octroi &

Entry Ta

x

<< Purchase Tax

CENTRAL LEVIES STATE LEVIES

GST

Taxes Subsumed Under Goods and Service Tax

GST’s Evolution: An Idea

• L.K. Jha Committee on Indirect Tax Reform• Transform Union excise duties into a modified value added tax (MODVAT) by converting specific rates into ad

valorem, unifying the rates and providing input tax credit1976

• Tax Reform Committee (Raja Chelliah)• Centralise all indirect taxes on goods into a single retail-stage VAT levied by the Centre• Rationalization and gradual expansion of the prevailing MODVAT into a wholesale stage VAT• Transform the states’ sales taxes on goods into a VAT up to the retail level• Services were to be taxed separately, and were not supposed to be a part of the input tax credit mechanism

1991

• Report of the Domestic Trade Taxes in India (Amaresh Bagchi)• A dual or concurrent VAT at central and state levels• The Central MODVAT was to be converted into a full-fledged VAT up to the manufacturers’ stage, • States were to transform their cascading-type sales taxes into a full-fledged retail stage VAT on goods

1994-95

• Expert Committee on Taxation of Services (M Govinda Rao)• VAT on goods and services• Convert the prevailing sales taxes at the state level into a comprehensive destination-based GST at the retail

level.• States were to transform their cascading-type sales taxes into a full-fledged retail stage VAT on goods

2001

Source: M. Govinda Rao, Tracing GST’s evolution as an idea in Business Standard dated 19-08-2016, page 11.

Chronology of Goods and Service Tax in India

Picture Courtesy: Ernst and Young Company, 2016

Source: First Discussion Paper On Goods and Services Tax In India by The Empowered Committee of State Finance Ministers, New Delhi November 10, 2009,p-33

Working of Goods and Service Tax: A Hypothetical Example

Manufacturer

Wholesaler

Retailer

Consumer

PV of Input= 100

SV of Supply= 150

PV of Supply= 155

SV of Supply= 180

PV of Supply= 182.5

SV of Supply= 223.75

Value Addition = 50

V A. = 37.5

Value Addition = 25

GST RATES

CGST = 05%

SGST = 05%

Supply Chain

Cost of Input

Value Addition

Value of Supply

Tax Rate

(CGST + SGST)

Gross Tax on Supply

ITC (10%)

Net Tax Burden

Selling Price Including

Tax

Producer 100 50 (150-100) 150 10% 15 10 5= 15-10 155

Wholesaler 155 25 (180-155) 180 10% 18 15.5 2.5= 18-

15.5182.5

Retailer 182.537.5 (220-182.5)

220 10% 22 18.25 3.75= 22-18.25 223.75

Price Paid By Consumer = Rs. 223.75Price Received By Producer= Rs. 150GVA in Supply Chain= Rs. 112.5Producers Share in Consumer Rupee= 67.03%TOTAL TAX BURDEN ON CONSUMER = Rs. 11.25

Features of Goods and Service Tax Components of GST- a) CGST and b) SGST (Dual GST)

Rates for CGST and SGST would be determined by taking into account the revenue consideration

CGST and SGST would be applicable to all the intra-state transaction of goods and services except the exempted goods & services

Payment of CGST and SGST would be separate

Allocation of PAN linked taxpayer identification no with total of 13-15 digits

Input tax credit would be available for discharging the tax liability on all the transaction. But no cross utilization of credit would be permitted.

Interstate transaction of goods and services would be subjected to IGST

Destination based taxes

Rates of CGST, IGST and SGST are expected to be equal to Revenue Neutral Rate (RNR)

Compensation to states

Particulars Existing Tax Structure GST StructureCascading Effect of Taxation Present Eliminated

Cross Utilization of ITC

Cross utilization of input tax (VAT etc.) and CENVAT (Excise & Service Tax) set-off out of reach

In case of IGST only,. Not available for CGST & SGST

Account of Complete value chain Not captured fully Fully Captured

Taxable Event

Excise Duty- ManufacturingVAT/Sale Tax- Sale of goodsService Tax- Realization of Service

“Supply” of goods and services

Compliance Less More

Administrative Cost More Less

Exemptions Around 300 Around 90

Tax Base Narrow Broad

Existing Tax Structure Vs. Goods and Service Tax

Source: Report of Task Force on GST, thirteenth Finance Commission, 2009

GST Rate Structure

PROPOSED GST RATESLower Rate Standard Rate Special Rate

Necessary items and goods of basic

importance

Goods in general Precious metals and Exempted items

Source: First Discussion Paper On Goods and Services Tax In India by The Empowered Committee of State Finance Ministers, New Delhi November 10, 2009,p-29

Proposed Revenue Neutral Rate 27%Expected Tax rate 20-23%Ideal GST rate ( 13th finance commission) 18%Global average GST rate 16.4%

Source: Ministry of Finance, 2016

Implications of GST on Agricultural Sector

GST and Agro-inputs

Agro- Inputs Existing Regime GST Regime EffectFertilizers# Enjoys bulk of subsidy;

tax concession; exemptions: about 70% cost of Urea is not taxed at present

If exemptions are removed- Incidence of taxation will increase on farmers;

Majority of inputs are kept out of GST

Seeds$ EXEMPTED EXEMPTED

Irrigation@ Electricity Electricity will be kept outside GST

Machinery No Excise & Custom Duties

Zero Rated

Agricultural Services

Exempted If Included in GST- Incidence of taxation will increase on farmers

Disclaimer: The real effect may vary based on the detail guidelines on the Tax rates; Concessions & Exemptions to Agro inputs in GST

# Satish Chander, (2016), GST and Fertilizers, Indian Journal of Fertilizers$ www.cbec.gov.in@ First Discussion Paper of EC on ST

GST and Investment in Agro-Processing IndustryParticulars Existing Regime GST Regime (18%) Effect

EXCISE DUTY

Refrigeration and Cold Chain

No Tax Incidence of taxation will increase

Machinery for the  preparation of meat, poultry, fruits, nuts/  vegetables

Excise Duty= 6% Incidence of taxation will increase

CUSTOM DUTY

All goods related to  Food Processing

Concessional BCD of 5% CUSTOM Duties are kept out of GST

Cold chain including pre-cooling unit, pack houses, sorting and grading lines and ripening chambers

Concessional BCD of 5%

Refrigerated containers 5%

SERVICES - EXEMPTEDInformation Source: MoFPI, GoI

Imports for Agro-processing would not

avail ITC

Disclaimer: The real effect may vary based on the detail guidelines on the Tax rates; Concessions & Exemptions to machineries for agro processing in GST

GST and Agricultural Output Agricultural Output

Unprocessed

Khanna, R. K. (2016)http://www .fnbnews.com/T op-News/gst-on-dairy-products-likely-to-have-direct-impact-on-milk-producers-38462

ProcessedNon- Taxable

Taxable

Goods Existing Regime GST Regime (18%) EffectFood Grains Generally exempt from the

CENVAT, but many of the food items, including food grains and cereals, attract the state VAT at the rate of 4%.

Price of food products will rise

Fruits and Vegetables

Rate of 2% without CENVAT or 6% with CENVAT

Price of food products will rise

Milk Products No tax on any of the fresh dairy products; VAT @2-5% on milk powders, 5% on chakka (basic raw material for shrikhand), table butter , cream, and UHT milk packed in sachets

Price of milk products will rise

Prices of agricultural goods would increase between 0.61 and 1.18 per cent

Prices of all manufacturing sector would decline between 1.22 and 2.53 per cent.

Terms of trade will move in favour of agriculture between 1.9 to 3.8 per cent.

The increase in agricultural prices would benefit millions of farmers in India.

(Thirteenth Finance Commission, 2009)

GST and Logistics and Transportation

Existing Regime RemarkEach of India’s states taxes goods that move across their borders at different rates

Multiplicity of Taxation

Long delays at inter-state checkpoints60% of India’s freight moves by roadTruck delays average Four-Eight hours at inter-state checkpoints

Higher logistics costs Logistics costs in India is higher by

two-to three times global benchmarks, according to the World Bank

Currently, each of India’s 29 states taxes goods that move across their borders at different rates.#.

Fright that moves across the country is taxed multiple times

GST Regime RemarkGST system seeks to replace multiple taxes and tariffsFree the decisions on warehousing and distribution from tax considerations

More efficient cross-state transportation with improvement in transit time.

Reformation of paperwork for road transporters

Cost efficiency to optimum use of assets

Source: U.K. Mahapatra, Pavers England Limited# http://www.livemint.com/Opinion/r2bFdm66acxASFWXlCS0RP/GST-a-new-road-for-transportation-and-logistics-industry-in.html

GST and National Agricultural MarketState Sales Tax Taxes (as percent of MSP)

Uttar Pradesh Foodgrains-4 % Pulses-2 %Oilseeds & Others- 4 %

16.71

Punjab 14.5

Haryana F&V – nil, Food grains—4 %Pulses—4 %, Oilseeds—4 %

11.5

Uttarakhand 7.5

Himachal Pradesh 5.0

Andhra Pradesh All Commodities (except Maize,Jowar, Ragi, Bajra, Coarse grains) 4 %

Gujarat 1.Spices --3%, 2.Aniseed-- 2%, 3.Cotton--4%, 4. Isabgol—2 %, 5. Cummin-2%,6. Ajwain—2 %

Karnataka 1.Foodgrains-nil2.Pulses -2% 3.Oilseeds-4%

Kerala Rs. 4 to 8 %

Madhya Pradesh NA 9.2

Maharashtra All agricultural commodities are exempted from Sales Tax

3.4

West Bengal NA 2.5

Facilitates the implementation of NAM by subsuming all the taxes on marketing of

agricultural produce.

Facilitate Interstate movement of agricultural commodities which would improve

marketing efficiency, reduce overhead marketing cost.

The simple uniform tax regime is expected to reduce the transportation time, and

curtail wastage of precious food.

The ease of availing tax credit under GST regime is expected to boost inter-state trade

leading to achieving the objectives of National Agricultural Market.

Source: Garg Irina, 2016

GST and International Trade

Imports would be subject to GST. Both CGST and SGST will be levied on import of goods and services into the country.

Exports, however, will be zero-rated, meaning exporters of goods and services need not pay GST on their exports

The gains in exports are expected to vary between 3.2 and 6.3 per cent and imports are expected to gain somewhere between 2.4 and 4.7 per cent

Source: Thirteenth Finance Commission, 2009.

Global Experiences in Goods and Service TaxN

o. o

f Cou

ntrie

s

Time Period

Source: OECD report on Countries with VAT

Trend in adoption of GST

Implementation of GST is expected to improve the gross domestic product (R. Vasanthagopal, 2011) by providing the government revenue and continuously ensure the liquidity of the treasury (A. Nakhchian et. al., 2013)

GDP in the Philippines and in Thailand was reduced by 16.43% and 7.90% respectively after implementing the GST. Only in Singapore, the GDP is increased by 17.98% during the period of implementing the GST (S. Venkadasalam, 2014)

Cont…

Summary & Conclusion

As cited by many of the literature on goods and service tax in India that GST is going to change the indirect tax structure in India and would be a milestone in Indian taxation history by integrating the nation with rest of the world in adoption of VAT. At the same time it is also anticipated that implementation of GST would boost the economic growth by the means of wider tax base; compliance in tax payment; and by pushing balance of trade on favorable side. However, in some of the countries this apprehension might not hold good.

About its implications on agricultural sector it could be conclude that though the overall tax burden on consumers will be less in new tax regime, but certainly it would have inflationary pressure on the food articles especially processed one which may lead to restoring the consumption towards fresh farm products.

On the other side of coin it may hurt the farming community as they have to pay higher taxes in new tax regime on inputs which in turn will reduce their net income. Since, the domestic as well as international trade would be encouraged in GST regime and if the gains from the trade are fairly transmitted to the back end then only it may help the farming community to maintain the current standard of living and investments in farm business.

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