COLD STORAGE

Storage and warehousing of agricultural produce has been exempted from GST, clearly with the intent to reduce the tax burden on the farming sector. This is a continuation of the earlier exemption of service tax for these services.

However, while issuing the related notifications, several anomalies have crept in, making the creation of storage and cold chain infrastructure as well as the provision of warehousing services liable for tax. Therefore, while corporates in most sectors appear to be adapting to the new regime with a few glitches, the agriculture infrastructure sector is struggling to come to terms with the changed regime.

The additional GST burden has mainly arisen because while output services have remained outside the tax net, input services are liable to GST without any corresponding opportunity to claim input tax credits. Most agri warehousing companies rent warehouses from small owners of the property. Such owners are likely to remain unregistered suppliers. However, such renting of warehouses by agencies engaged in providing storage and warehousing services is liable to GST under a reverse charge at the rate of 18 per cent.