The Federation of Seed Industry of India (FSII) has welcomed the GST Council’s recommendations to exempt storage and warehousing services for seeds meant for sowing, while seeking clarity on two proposed tax measures that could increase costs or working-capital requirements for businesses.
The recommendations of the 57th GST Council meeting, held recently in New Delhi, include measures to reduce costs across the seed value chain, improve export competitiveness and simplify compliance for businesses, the industry body said in a statement.
Seeds will continue to be nil-rated under GST, with no change in the applicable tax rate. However, GST paid on seed storage and warehousing services has so far been an unrecoverable cost for the industry. The proposed exemption is expected to ease this burden at a critical stage in the seed supply chain, helping preserve seed quality and viability ahead of sowing seasons.
FSII said the exemption would benefit the seed industry by reducing costs associated with storing seeds before they reach farmers.
Export Reforms to Improve Cash Flows
The federation also welcomed proposed measures to strengthen export competitiveness, including faster, system-based tax refunds and expanded eligibility for refunds of input tax credit on capital goods. These measures could improve cash flows for eligible seed exporters and support the industry's export operations, FSII said.
The proposed reforms to e-way bill interception, GST registration and penalties could also reduce compliance burdens for seed companies, dealers and distributors. These businesses frequently transport consignments across state boundaries within narrow sowing windows, making timely movement and simplified procedures particularly important.
FSII Stresses Importance of Affordable Quality Seeds
Ajai Rana, Chairman of FSII, said the Council’s recommendations reflected a clear focus on improving the ease of doing business, with the warehousing exemption addressing a long-standing cost concern in the seed value chain.
“Quality seed is the foundation of farm productivity, and every measure that reduces costs across storage, movement and exports ultimately strengthens farmers’ access to it,” Rana said. He added that the federation would work with its members and engage constructively with the government to obtain clarity on implementation, ensuring that no segment of the industry faced a disproportionate compliance or cost burden.
Most of the procedural reforms recommended by the GST Council are expected to take effect from 1 April 2027.
Two Proposals Need Greater Clarity
While welcoming the broader reform agenda, FSII highlighted two proposals that require further examination.
The first is the proposed 5% GST without input tax credit on specified e-commerce delivery services. The second is the proposed 2% tax deducted at source (TDS) on specified business-to-business transactions involving waste and scrap.
According to FSII, both measures could have cost or working-capital implications for affected businesses. The federation plans to seek clarification from the government on their scope and application to the seed sector.
The industry body said it would assess the implications of the proposed changes in consultation with its members and engage with the government to ensure clarity during implementation.