Ans: It is true that Cotton, under certain chapters, has been kept in the 5% slab. However, according to Section 23(1)(b) of the CGST Act, 2017 an agriculturist is not liable to register or pay GST to the extent that the supply of produce is out of cultivation of land. However, under Section 9 (4) of the CGST Act, 2017, buyers of raw cotton (who are registered individuals) from the farmer must pay tax on a reverse charge basis.
- As per Chapter 53 heading 5303 of the GST rate schedule, raw jute has been kept at the NIL rate slab. Thus, it is presumed that suppliers dealing only in raw jute are not required to register themselves under GST. But Jute Mills are asking their raw jute suppliers to mandatorily register themselves, else their supplies would not be accepted. Please clarify whether raw jute suppliers are liable for registration?
- Cotton under chapter heading 5201 and 5203 has been kept in a 5% rate slab. Does this mean that cotton farmers are required to register under GST?