India: FSII Seeks Clarity on GST Proposals Affecting Seed Industry Costs

23 October 2026, New Delhi: The Federation of Seed Industry of India (FSII) has sought clarity on two proposed GST measures that could affect costs and working capital in the seed sector, while noting that the proposed exemption on storage and warehousing services for seeds meant for sowing could reduce an existing cost burden.

Seeds remain nil-rated under GST, with no change in the applicable tax rate. However, GST paid on storage and warehousing services has been an unrecoverable cost for the seed industry. The proposed exemption, recommended at the 57th GST Council meeting in New Delhi, is expected to reduce this burden and support the maintenance of seed quality and viability ahead of sowing seasons.

FSII also noted the proposed reforms aimed at improving export competitiveness, including faster, system-based refunds and expanded eligibility for refunds of input tax credit on capital goods. These measures could improve cash flows for eligible seed exporters.

Changes proposed for e-way bill interception, registration and penalties could also reduce compliance requirements for seed companies, dealers and distributors transporting consignments across state boundaries, particularly during time-sensitive sowing seasons.

The Federation has identified two proposals requiring further clarification: a 5% GST without input tax credit on specified e-commerce delivery services, and 2% tax deducted at source (TDS) on specified business-to-business waste and scrap transactions. FSII said the measures could have cost or working-capital implications for affected businesses and that it would engage with the Government to clarify their scope and application to the seed sector.

Ajai Rana, Chairman of FSII, said the proposed warehousing exemption addresses a long-standing cost in the seed value chain. He noted that reducing costs associated with storage, movement and exports could help strengthen farmers’ access to quality seeds.

FSII said it would assess the implications of the proposed changes in consultation with its members and engage with the Government to seek clarity on implementation and ensure that the measures do not impose disproportionate compliance or cost burdens on any segment of the industry.

Most of the procedural reforms recommended by the GST Council are expected to take effect from 1 April 2027.

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