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News » Tractor Prices May Increase by Rs. 25000 due to Increased GST Rates

June 20, 2017

Tractor Prices may Increase by Rs. 25000 due to Increased GST Rates


The tractor industry is likely to see a price hike on tractors in India from July 2017 as soon as the GST is implemented. Current GST rate on individual tractor components has been kept at 28%. This would add up to ₹25000 per tractor cost to manufacturers. The duty on tractors will be at 12%. However the GST council reduced the duty from 28% to 12% on the exact components which are identified to be used in tractors only.

 The revised rates of GST are applicable to component level only as the finished assemblies like transmission, engines, hydraulics etc. will continue to attract 28% GST.

GST tractors
GST for key assembly parts has been set at 28%

 “So this way the relief provided is nominal and the industry will have to take additional burden of increased rates. This will also adversely impact the working capital of industry”. Said Mr. TR Kesavan, Chairman of the technical committee of TMA (Tractor Manufacturers Association).


Even Ms. Mallika Srinivasan, chairperson and chief executive officer of Tractors and Farm Equipment Limited (TAFE), said, “Unfortunately the GST has only been partially rolled out and the increase in input cost stands at ₹25,000.” 

She requested government to reconsider the current GST rates for all those components which go for tractor manufacturing, because this will help survival of farming community.



Mr. Ravi Menon, CEO of Escorts agri said that the manufacturers will have to bear this increased cost by themselves as due to anti-profiteering clause, they cannot pass on the increased costs to customers, according to the TMA.


Key Points:


·  The GST on tractor parts 28%

·  Clearly identifiable components rated at 12% from 28%

·  Tractors will attract GST of 12%

·  Expected tractor price rise by around ₹25000


Keep visiting this area as we soon cover details about other agricultural machinery.