GST Registration and Tax on Brokerage of Processed Agricultural Produce
Brokerage services for processed agricultural products like de-husked pulses are taxable at 18% and require GST registration.
- Ruling
- AAR No.01/AP/GST/2024 dated: 04.01.2024
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Gayatri Enterprises asked if brokerage for agricultural produce is exempt from GST.
- The Authority ruled that processed pulses are not considered agricultural produce.
- Brokerage services for these items are taxable at 18% under Heading 9961.
- The business must register for GST regardless of their total turnover.
In short
The company asked if their brokerage business for agricultural produce qualifies for a GST exemption. The Authority for Advance Ruling (AAR) decided that because the pulses were processed—such as being de-husked or split—they no longer count as agricultural produce. Consequently, the brokerage services provided for these goods are taxable.
What has changed
How it worked before
Many businesses assumed that any service related to agricultural produce, including brokerage, was exempt from GST under the support services category.
What has changed
The ruling clarifies that processing agricultural goods removes them from the 'agricultural produce' exemption. Businesses providing brokerage for processed items must now register for GST and charge 18% tax on their fees.
Who this affects
Commission agents, brokers, and traders who facilitate the sale of processed agricultural goods like de-husked pulses or split grains.
An example
Consider a broker, 'GreenGrain Traders', who facilitates the sale of polished rice and split lentils. They previously did not register for GST, believing their work was exempt agricultural support. Based on this ruling, GreenGrain Traders should register for GST and charge 18% on their brokerage fees, as their products are processed.
What you should do
If you provide similar services, review whether the goods you handle are truly raw agricultural produce or processed items. Note that this ruling only binds the company that asked; your local tax officer may still have a different view on your specific business model.
If you do nothing
If you assume this ruling applies to you and stop paying tax, or conversely, if you ignore the ruling and fail to register when required, you risk penalties for non-compliance. A tax officer may issue a notice for unpaid GST, interest, and heavy fines. Always consult a professional to see if your specific operations match the facts of this case.
The terms explained
- Agricultural produce
- Raw produce from cultivation that has not been processed or changed in form to make it marketable.
- Heading 9961
- A specific classification code used in GST for services provided by wholesale trade agents or brokers.
- Advance Ruling
- A formal decision by tax authorities on how GST laws apply to a specific business's situation.
The ruling in detail
Authority for Advance Ruling
M/s Gayatri Enterprises
AAR No.01/AP/GST/2024 dated: 04.01.2024 · Andhra Pradesh
Questions before the authority
- Since we are dealing in brokerage of agricultural produce which is exempt, are we liable for GST Registration?
- If we are liable for GST Registration, do we need to charge GST?
- If Yes, What is the rate of GST?
Facts
The applicant acts as a commission agent or broker facilitating transactions between wholesalers and millers or farmers for agricultural produce. They charge a fixed brokerage fee per bag for these services. The applicant processes certain products, such as de-husking or splitting pulses, to make them marketable.
Ruling
| Question | What the authority ruled |
|---|---|
| Liability for GST Registration | Yes The applicant is liable for registration as a commission agent |
| Requirement to charge GST | Yes GST must be charged on brokerage services |
| Rate of GST | CGST - 9% and SGST - 9% Applicable under Heading 9961 |
The Authority ruled that the applicant is liable for GST registration and must charge GST on their brokerage services. It determined that the services provided do not qualify for the exemption granted to agricultural produce support services because the processed pulses fall outside the definition of agricultural produce. Consequently, the brokerage income is taxable at the specified rate.
Reasoning
The Authority reasoned that the applicant's services do not fall under the **NIL GST exemption** for support services to agriculture because the processed pulses are not considered agricultural produce under the relevant notifications. As a commission agent, the applicant is providing services in wholesale trade under **Heading 9961**. Therefore, the applicant is required to obtain registration and pay tax at the rate of 18% (9% CGST and 9% SGST) regardless of the turnover limits, as per the provisions of the **CGST Act** and **Notification No. 11/2017-Central Tax (Rate)**.
Provisions relied on
- Section 97(2) of CGST/SGST Act, 2017
- Section 98 of CGST/SGST Act, 2017
- Section 2(5) of CGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate)
- Notification No. 12/2017-Central Tax (Rate)
For the practitioner
This ruling clarifies that commission agents facilitating the sale of processed agricultural products cannot claim the **agricultural support services exemption**. It confirms that such brokerage services are taxable at 18% under **Heading 9961**. Practitioners should note that the definition of agricultural produce is strictly interpreted to exclude processed items like de-husked pulses.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/01_gayatri_enterprises.pdf
Legibility of the scan, as read: high.
Prepared 11-10-2026.
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