GST Council Eases Tax on Seed Storage, Coffee Curing and Tractor Tyres: What It Means for Farmers
The GST Council met for the 57th time on 8 October 2026 at Bharat Mandapam, New Delhi. Along with a large package of procedure reforms, it cleared four changes for farm-related goods and services.
Seed storage: Storage and warehousing of seeds meant for sowing is now exempt from GST. Earlier there was confusion, because seeds are often graded, treated with chemicals and packed, and it was unclear whether they still counted as "agricultural produce".
Coffee curing: A separate exemption was created for coffee-curing services given to growers. Curing means drying, hulling, cleaning, sorting and grading harvested coffee so that it can be sold.
Psyllium seeds (isabgol): These now get a nil rate whether they are sold fresh, chilled, frozen or dried, so the tax no longer depends on the form of the seed.
Retreaded tractor tyres: These now attract 5% GST, the same as new tractor tyres. Retreading means putting a new tread (the gripping outer layer) on an old tyre, which is cheaper than buying a new one.
The changes aim to lower costs for small farmers. Marginal farmers (those with less than 1 hectare) hold about 68.5% of India's operational landholdings, according to the Agriculture Census 2015-16.
The GST Council (Article 279A)
The GST Council is the body that decides the main rules of the Goods and Services Tax (GST): tax rates, which goods and services are taxed, and which are exempt. It is made up of the Union Finance Minister and the finance ministers of all states. It was created by the Constitution itself through Article 279A, so it is a constitutional body. Because both the Centre and the states sit together in it, it is often called an example of cooperative federalism.
The 57th meeting of the Council on 8 October 2026 recommended the exemptions for seed storage and coffee curing, the nil rate for psyllium seeds and the 5% rate for retreaded tractor tyres. These will take effect when the government issues notifications.
Exempt, Nil-Rated and Non-GST Supplies under GST
Under GST, not every sale is taxed. Some goods and services carry no GST at all, but they reach that "zero" in different ways. Some are exempt by a government notification. Some are put in the schedule at a nil rate (0%). Some are kept outside GST altogether, like petrol and liquor. And exports are zero-rated, which looks similar but works very differently. For a buyer, all of these may look like "no tax", but for the seller they lead to very different results, mainly on whether the seller can get back the tax it paid on its own purchases.
The 57th GST Council meeting used both tools explained here. It created exemptions for seed storage and coffee curing, gave psyllium seeds a nil rate in every form, and put retreaded tractor tyres at the 5% rate. Because exemptions block input tax credit for the service providers, the actual relief farmers feel will depend on how much of the saving is passed on to them.
Input Tax Credit (ITC) Mechanism Under GST
Input tax credit is the system that lets a business subtract the GST it paid on its purchases from the GST it collects on its sales. It makes sure tax is paid only on the value added at each step, not again and again on the full price. It is the backbone of GST, and the main reason the choice between "exempt" and "taxed at a low rate" matters.
Retreaded tractor tyres now carry 5% GST, so retreading businesses can continue to claim ITC on their inputs. Seed storage and coffee curing are now exempt, which removes tax for growers but means the service providers cannot claim ITC on the inputs used for these services.
- 57th GST Council meeting: 8 October 2026, Bharat Mandapam, New Delhi
- Storage and warehousing of seeds meant for sowing: exempt (not for seeds used as food or for industry)
- Coffee-curing services supplied to cultivators: separate exemption
- Psyllium seeds (isabgol): nil rate, whether fresh, chilled, frozen or dried
- Retreaded tractor tyres: 5% GST, same as new tractor tyres (tractor tyres cut from 18% to 5% from 22 September 2025)
- Marginal farmers hold about 68.5% of operational landholdings (Agriculture Census 2015-16)
- GST Council: Article 279A, inserted by the 101st Amendment Act, 2016; decisions by three-fourths of weighted votes