Clarification regarding GST rate on laterals/parts of Sprinklers or Drip Irrigation System

Circular No.: 155/11/2021-GST
Date of Circular: 17th June 2021
Relevant Sections and Rules:

• CGST Rate Notification:
  • Notification No. 1/2017–Central Tax (Rate) dated 28.06.2017
    • Schedule II, S. No. 195B (inserted via Notification No. 6/2018–CT(R) dated 25.01.2018)
• HSN Reference:
  • Chapter Heading 8424 (as per Section XVI, Note 2(b) of the HSN)

Summary of Clarification Provided:

1. GST Rate on Laterals and Parts Supplied Separately for Drip/Sprinkler Irrigation Systems:
   Clarification was sought on the GST rate applicable to parts or laterals of drip or sprinkler irrigation systems when sold independently, i.e., not bundled with the entire system.

The matter was reviewed in the 43rd GST Council meeting on 28.05.2021.

2. Coverage Under Entry 195B of Notification No. 1/2017-CTR:
   Entry 195B under Schedule II (6% CGST rate) applies to:

• Sprinklers
• Drip irrigation systems
• Including laterals and mechanical sprayers

Therefore, if laterals or parts are used solely or principally with drip/sprinkler systems and are classifiable under Heading 8424, they attract 12% GST (6% CGST + 6% SGST), even if supplied separately.

3. Classification Condition – Sole or Principal Use with Irrigation System:
   As per Note 2(b) to Section XVI of the HSN, to be eligible under Heading 8424:

• The part must be suitable for exclusive or principal use with the irrigation system.
• Generic-use parts that fall under other headings will attract GST as per their respective classification.

Source: Circular No.: 155/11/2021-GST