# Services Relating to Agriculture - GST Exemption

## Exempt Services (List)

Services relating to cultivation of plants and rearing of all life forms (except horses) for food, fibre, fuel, raw material or other similar products, or agricultural produce by way of:

1. Agricultural operations directly related to production (cultivation, harvesting, threshing, plant protection, testing, etc.)

2. Supply of farm labour

3. Processes carried out at the agricultural farm (tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling, bulk packaging) which do not alter essential characteristics but make the produce marketable for primary market

4. Renting or leasing of agro-machinery or vacant land with/without structure incidental to its use

5. Loading, unloading, packing, storage, or warehousing of agricultural produce

6. Agricultural extension services

7. Services by Agricultural Produce Marketing Committee (APMC) / Board OR services provided by a commission agent for sale or purchase of agricultural produce

## Allied Activities Also Exempt

Pisciculture (fish farming), Sericulture (silkworms), Floriculture (flowers), Horticulture → EXEMPT
Services by NCCD (National Centre for Cold-chain Development) → EXEMPT
Artificial insemination of livestock (other than horses) → EXEMPT
Warehousing of minor forest produce → EXEMPT

## Critical Taxability Carve-outs

Item	Status	Reason
Potato chips / Tomato ketchup	TAXABLE	Processed beyond primary market
Cleaning of wheat outside the farm	TAXABLE	Not at agricultural farm
Cleaning of wheat at the farm	EXEMPT	Process at farm, doesn't alter character
Black tea / Green tea / White tea	TAXABLE	Tea leaves processing alters character
Jaggery	TAXABLE	Processed product
Pulses dehusked / split	TAXABLE	Beyond primary marketable form
Milling of paddy into rice	TAXABLE	Changes essential character
Job work in relation to agriculture	EXEMPT	If on agricultural produce in primary form

## Pre-conditioning, Pre-cooling, Ripening, Waxing

Pre-conditioning, pre-cooling, ripening, waxing, retail packing, labelling of fruits and vegetables → EXEMPT

Worked example

### Example 1

Example 1: A farmer pays ₹50,000 for harvesting his wheat crop. → Agricultural operation → EXEMPT.

### Example 2

Example 2: A rice mill charges ₹2 lakh for converting paddy into rice for a customer. → Milling of paddy into rice alters essential character → TAXABLE.

### Example 3

Example 3: A cold storage warehouses 100 tons of potatoes. → Warehousing of agricultural produce → EXEMPT.

### Example 4

Example 4: A cold storage stores potato chips. → Not agricultural produce (processed) → TAXABLE.

### Example 5

Example 5: Mr. X provides commission agent services for sale of wheat in APMC market and earns commission. → EXEMPT.

### Example 6

Example 6: A company waxes apples and packs them for retail. → Pre-conditioning + packing of fruits → EXEMPT.

⚠️ Common exam mistakes

Treating all processed agricultural items as exempt — once essential character changes (rice, jaggery, tea, ketchup), it becomes taxable.
Forgetting that cleaning outside the farm is taxable while cleaning at the farm is exempt.
Assuming horses are covered — agricultural exemption excludes horses.
Including potato chips and ketchup as agricultural produce — they are processed and taxable.
Confusing milling of paddy into rice (TAXABLE) with mere cleaning/grading at farm (EXEMPT).
Forgetting that dehusked/split pulses are taxable while whole pulses are exempt.

Bare-Act text Entry 54 & 55 · Notification No. 12/2017-Central Tax (Rate) · click to expand

Services relating to cultivation of plants and rearing of all life forms of animals, except the rearing of horses, for food, fibre, fuel, raw material or other similar products or agricultural produce.

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Services Relating to Agriculture / Agricultural Produce

Worked example

⚠️ Common exam mistakes