New Amendment for Agricultural Produce in Jharkhand

On August 14, 2024, the Jharkhand Government issued a significant notification amending the Goods and Services Tax (GST) regulations concerning agricultural produce. This notification, published in the Jharkhand Gazette Extraordinary, introduces key changes that impact how agricultural products are classified and taxed

Background

The notification amends an earlier regulation (Notification No. 2/2017-State Tax (Rate), dated June 29, 2017) under the Jharkhand Goods and Services Tax Act, 2017. This Act governs the collection of GST in the state of Jharkhand and ensures uniformity in tax rates and procedures.

Key Amendment Details

1. New Proviso Introduced: The main change is the introduction of a new proviso in the Explanation of clause (ii) after the Schedule of the original notification. Here’s what this new proviso entails:
   • Exemption from “Pre-packaged and Labelled” Classification: The proviso specifies that, despite existing provisions under the Legal Metrology Act, 2009, agricultural produce packaged in quantities exceeding 25 kilograms or 25 liters will not be classified as “pre-packaged and labelled.” This classification typically involves more stringent labeling and packaging requirements, which this amendment seeks to relax for larger quantities of agricultural produce.
2. Impact on Legal Metrology Act:
   • The Legal Metrology Act, 2009, regulates the packaging and labeling of goods to ensure consumer protection. This amendment effectively overrides certain provisions of this Act for agricultural produce, thereby simplifying compliance for businesses dealing in larger quantities.

Implications for Businesses

1. Regulatory Relief:
   • Eased Compliance: The amendment is designed to ease the regulatory burden on businesses that handle large volumes of agricultural produce. Previously, such products might have been subject to stricter packaging and labeling requirements under the Legal Metrology Act.
   • Cost Savings: By not classifying large quantities as “pre-packaged and labelled,” businesses could potentially reduce costs associated with compliance, including packaging and labeling expenses.
2. GST Application:
   • Businesses should review their GST practices to ensure that they correctly apply the tax provisions to agricultural produce in quantities over 25 kilograms or 25 liters. The new classification may affect how GST is calculated and reported.
3. Operational Adjustments:
   • Companies involved in the production, packaging, and distribution of agricultural products should adjust their operations to comply with the new rules. This includes updating internal policies and training staff to handle the revised classification.
4. Effective Date:
   • The changes specified in the notification will be effective from July 15, 2024. Businesses should be aware of this date to ensure they align their practices with the new regulations.

Conclusion

The recent amendment to the GST regulations for agricultural produce in Jharkhand represents a significant shift in how large quantities of such produce are managed under tax laws. By exempting larger packages from being classified as “pre-packaged and labelled,” the state government aims to reduce regulatory complexity and associated costs for businesses in the agriculture sector.