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GST on tractors in India: exemptions and rates
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Understanding the GST rates applicable to tractors and agricultural equipment is crucial for farmers, dealers, and businesses involved in agriculture. The government has revised GST rates to provide relief and boost the sector. Here’s a quick overview:
- Old GST rates on tractors and parts were generally higher.
- New GST rates effective from September 22, 2025, offer significant reductions.
- These changes aim to make tractors and machinery more affordable and accessible.
If you’re considering upgrading your equipment, check your business loan eligibility to explore financing options. Explore more about the GST rate and GST in general to understand the broader tax structure.
Old and new GST rates for tractors in India
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Type of tractor Old GST rate New GST rate (Effective from Sep 22, 2025) Utility tractors 12% 5% Mini tractors 12% 5% Commercial tractors 12% 5% Orchard tractors 12% 5% Row-crop tractors 12% 5% Industrial tractors 12% 5% Compact tractors 12% 5% Garden tractors 12% 5% Agricultural machinery (Harvesters, Rotavators) 12% 5%
Old and new GST rates for tractor parts in India
| Tractor part | Old GST rate | New GST rate (Effective from Sep 22, 2025) |
|---|---|---|
| Tractor tires and tubes | 18% | 5% |
| Diesel engines (Up to 15HP) | 12% | 5% |
| Diesel engines (Above 15HP) | 18% | 5% |
| Hydraulic pumps | 18% | 5% |
| Wheel rims | 18% | 5% |
| Gearbox | 18% | 5% |
| Transmission | 18% | 5% |
| Radiator and silencer | 18% | 5% |
| Clutch and steering wheel | 18% | 5% |
| Fender, hood, grille, side panels | 18% | 5% |
| Other major tractor parts | 18% | 5% |
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HSN codes for different types of tractors
HSN codes play a vital role in GST compliance, helping classify tractor types and related equipment accurately for taxation.
Explore the relevant HSN code for tractors and related products to ensure proper GST filing.
How to calculate GST on the tractor
To calculate GST on tractors, apply the applicable GST rate on the transaction value, including discounts if any. Proper invoicing is important for claiming tax credits.
Use the GST calculator to accurately estimate the GST payable on your tractor purchase. Additionally, you may want to check your pre-approved business loan offer to support your purchase decision.
Impact of GST on the tractor industry
- Reduced GST rates have lowered the overall cost of tractors, making them more affordable for farmers.
- The industry is expected to see a boost in sales and growth due to the tax relief.
- Increased accessibility of affordable tractors may lead to higher mechanisation in agriculture, improving productivity.
What is the Input Tax Credit on tractors?
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Input Tax Credit (ITC) allows businesses to claim credit for GST paid on purchases. For tractors used in business or farming, eligible GST paid on inputs can be adjusted against output GST liabilities, helping reduce the overall tax burden.
Learn more about Input Tax Credit for tractors and agricultural machinery.
GST exemption benefit for farmers
- Farmers benefit from GST exemptions and lower tax rates on tractors and essential agricultural tools.
- These benefits help farmers upgrade their equipment and improve operational efficiency without bearing high tax costs.
Exemptions and reduced rates encourage the adoption of modern farming equipment.
Conclusion
The reduction in GST rates on tractors and parts as of 2025 offers substantial relief to the agricultural sector by making equipment more affordable. Understanding GST rates, HSN codes, and ITC provisions is essential for farmers and businesses to maximise benefits and maintain compliance. For financial support in purchasing tractors or upgrading farm machinery, consider applying for a business loan.
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Frequently Asked Questions
Overview
What is the new GST rate on tractors after the reforms?
As of September 22, 2025, the Goods and Services Tax (GST) on tractors has been reduced to 5%, down from 12%. This applies to all tractors used for agricultural purposes, including both two-wheel drive (2WD) and four-wheel drive (4WD) models. The reduction is part of the GST 2.0 reforms aimed at making farm mechanisation more affordable for farmers.
What is the GST rate now on tractor parts and tyres?
Following the GST reforms, the tax rate on tractor parts and tyres has been reduced to 5%, down from 18%. This includes components such as axles, gearboxes, radiators, clutches, brakes, and tyres and tubes. The reduction aims to lower maintenance costs for farmers and promote the use of mechanized farming equipment.
How will the GST rate reduction benefit farmers?
The reduction in GST on tractors and their parts will lower the upfront and maintenance costs of farm machinery. This makes mechanization more accessible, especially for small and medium farmers. Consequently, farmers can save time, reduce labor costs, and improve productivity, leading to enhanced agricultural efficiency.
Does this new GST rate apply to all types of tractors?
No, the 5% GST rate applies only to tractors used for agricultural purposes. Tractors intended for road or commercial use, especially those above 1800cc, continue to attract an 18% GST rate. This distinction ensures that the tax relief benefits are directed towards promoting agricultural mechanisation.
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