What Agricultural Services are covered in Negative List?
- Agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or testing
- (Activities like breeding of fish (Pisciculture), rearing of silk worms (sericulture), cultivation of ornamental flowers (floriculture) and horticulture, forestry are included in the definition of agriculture. Planting of rubber, tea, coffee also covered in definition of negative list)
- Supply of farm labour
- Processes which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market:
- Renting or leasing of agro machiner y or vacant land with or without a structure incidental to its use:
- Loading, unloading, packing, storage or warehousing of agricultural produce
- Agricultural extension services (it means applying scientific practices to agriculture and training and education of farmers)
- Services by any Agricultural Produce Marketing Committee or Board
- Services provided by a commission agent for sale or purchase of agricultural produce:
However following activities taxable
- Process which alters the essential characteristics of the agricultural produce:
- (example making potato chips out of potato, tomato ketchup out of tomato
- Process which makes agricultural produce marketable in the retail market:
- (like packing, grinding in retail packs etc )
- Agricultural produce includes Rice but excludes paddy. Hence processing of rice from paddy is taxable.
Circular No.177/03/2014 ST dated 17.02.2014
Agriculture means the
cultivation of plants and rearing of all life-forms of animals, except the rearing of horses,
for food, fibre, fuel, raw material or other similar products.
QUESTIONS
Question 3
‘Big Agro Handlers’ furnishes the following details with respect to the services provided by them in the month of June, 2014:
(i) Supply of farm labour 58,000
View answer
Supply of farm labor is an agricultural services.
It is covered in Negative List and hence not taxable
(ii) Warehousing of biscuits 1,65,000
View answer
Biscuit is not an agricultural produce,
Hence not covered in Negative List and hence taxable
(iii) Sale of rice on commission basis 68,000
View answer
Agricultural produce includes Rice but excludes paddy.
Circular No.177/03/2014 ST dated 17.02.2014
Since rice is sold,it is taxable
(iv) Training of farmers on use of new pesticides and fertilizers developed through scientific research 10,000
View answer
It is an Agricultural extension service .
Hence,It is covered in Negative List and hence not taxable
(v) Renting of vacant land to a stud farm 1,31,500
View answer
Stud farms are used for rearing horses and rearing of horses are not covered in agriculture definition
Agriculture means the
cultivation of plants and rearing of all life-forms of animals, except the rearing of horses,
for food, fibre, fuel, raw material or other similar products.
Hence,it is not a service relating to agriculture and hence taxable
(vi) Testing undertaken for soil of a farm land 1,21,500
View answer
It is an Agricultural extension service .
Hence,It is covered in Negative List and hence not taxable
(vii) Leasing of vacant land to a dairy farm 83,500
View answer
It is covered in Negative List and hence not taxable
Question 4
Reliable Agro Industries Ltd. furnishes the details of various services provided by it in the month of May, 2014 as under:
1. Supply of farm labour 55,000
View answer
Supply of farm labor is an agricultural services.
It is covered in Negative List and hence not taxable
2. Warehousing of refined vegetable oil 1,25,000
View answer
Refined Vegitable Oil is not an agricultural produce,
Hence not covered in Negative List and hence taxable
3. Sale of wheat on commission basis 60,000
View answer
Services provided by a commission agent for sale or purchase of agricultural produce:
4. Giving trucks on hire (without transferring the right to use) for transport of minerals 2,50,000
View answer
It is a declared service,hence taxable.(Moreover,it is not agricultural operation)
5.Leasing of vacant land to a stud farm 30,000
View answer
Stud farms are used for rearing horses and rearing of horses are not covered in agriculture definition
Agriculture means the
cultivation of plants and rearing of all life-forms of animals, except the rearing of horses,
for food, fibre, fuel, raw material or other similar products.
Hence,it is not a service relating to agriculture and hence taxable
6. Renting of farmhouse for marriage and birthday parties 45,000
View answer
Since,vacant land is not used for agricultural operations,it is tnt covered in Negative list and hence taxable
7. Dehusking of paddy in rice mill on job work basis 32,000
View answer
Paddy is an agricultural produce.Hence not taxable