Why Agriculturists & Small Traders are exempted from Registering Under GST?

Agriculturists & Small Traders are exempted from Registering Under GST


1) GST has been introduced by the Government of India to bring all the indirect taxes which were levied on the purchase & supplies of goods & services.

2) GST has set different tax rates for different industries. Therefore, for some sectors, GST is considered to be an advantage. Whereas for some it is a disadvantage as they are being taxed at higher rates than earlier.

3)    Implementation of GST has also brought some advantages for agriculturist & small traders in the form of exemptions from registering or paying or filing any tax return.

4)    Exempting agriculturist & small traders whose annual business turnover does not exceed INR 20 lacs was a collective decision by the State & Central Government.

The advantages provided to an Agriculturist in the following ways:

1) Money constraint:

  1. a) It would be a burden to pay higher taxes for the low income generated from agriculture.
  2. b)    Hence the government has taken a wise decision for exempting agriculturists from registering under GST as it would be very difficult for them to pay the new & increased taxes.

2) Less Educated:

  1. a) Many farmers would have found it very difficult to understand & follow the new rules for tax.
  2. b) As many of the farmers are mostly uneducated & GST registration & filing requires knowledge & ability to understand the new law, its application & requirements for filing its returns.

3) Having less knowledge about technology:

  1. a) GST compliances would almost be impossible for agriculturists as many of them don’t have or out of reach of technology.
  2. b) Hence, it’s better if they’re not required to register under the GST.

4) Low Profit:

To make the payment of the increased taxes under GST would have been impossible for the farmers to pay as the profit generated from the cultivation of foods is very low.

5)    Cultivation of Needs Based Products:

  1. a) It’s not ethically correct to tax agriculturists on the cultivation of need-based products such as vegetables, pulses, grains, etc.
  2. b)    Therefore, it is a good decision to exempt the farmers or agriculturists under GST.

Advantages provided to Small Traders in the following ways:

1)    Small traders are Exempted on the Basis of the Turnover, as they are required to register under GST or to file returns under GST only if the annual business turnover exceeds INR 20 Lacs. However small traders with turnover less than INR 1.50 crore will only have to register under GST but do not have to pay all the taxes as specified under GST & can learn under which category slab they fall under.

2) The Special Category States such as the North Eastern States are exempted if the annual business turnover does not exceed INR 10 Lacs.

3)    Generally, small traders deal in the Need-Based Products. Therefore, it is a good decision to exempt small traders from registering under GST.

4) Some Items are not Listed under the slab of the GST. Hence, such products would be exempted from the tax under any circumstances.

5) To help the small traders to Function their Business Smoothly, the council will also make approximately 90% of the refund claims within 7 working days. This would be done for not blocking the money of the small traders.


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