The Tractor Manufacturers' Association (TMA) has pointed out that the proposed GST rate of 28 per cent for tractor components would lead to an increase in input cost by Rs 25,000 per tractor. TMA has requested the government to reduce the duty for all tractor components to 18 per cent from 28 per cent.

As per the current plan, the downward revision of GST is limited to token components of a tractor and major aggregates and components such as engines, transmissions and other parts will continue to be levied at 28 per cent.
Tractors so far had nil final duty, will now have a GST of 12 per cent. TMA had requested changing component duties in tractors from the proposed 28 per cent to 18 per cent. However, this has only been partially rolled out as of now. Some tractor components were included in the list of 66 items for which the Finance Minister announced a revised GST rate of 18 per cent.

It is observed that in implementation, with the inverted duty structure of input tax of 28 per cent and output tax of 18 per cent, the relief provided is marginal and the input cost per tractor would go up by about Rs 25,000, having an impact on industry working capital to the extent of Rs 1,600 crore, according to a statement of TMA.