Farmers growing Subabul and Eucalyptus in Andhra Pradesh face an 18% GST burden and competition from imported wood chips, according to Lanka Dinakar, who has urged the central government to grant tax relief.

  • Subabul and Eucalyptus crops are taxed at 18% GST.
  • Farmers request exemption or a reduced 5% rate.
  • A dedicated committee is sought to formulate a permanent policy.

Lanka Dinakar, Chairman of Andhra Pradesh’s Twenty‑Point Programme, has appealed to the Union Government for GST relief for Subabul and Eucalyptus growers. He submitted separate representations to Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal highlighting the heavy tax burden.

The West Wood Farmer Producer Company Limited and several Farmer Producer Organisations (FPOs) reported that these trees are primarily cultivated by small and marginal farmers and supplied to the paper‑pulp sector. The 18% GST, coupled with a surge in imported wood chips, has dampened domestic demand, cutting farmers’ earnings.

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Historically, Subabul (a type of softwood) and Eucalyptus were promoted in Andhra Pradesh from the early 1990s as part of an agro‑forestry model aimed at providing a steady income stream to rural households. Initially successful, the sector now grapples with global market competition and high taxation.

Dinakar is seeking formal recognition of Subabul and Eucalyptus as agricultural produce, which would make them eligible for GST exemption. As an interim measure, he proposed lowering the GST rate to 5%.

He also called for the constitution of a committee to examine the issue in depth and recommend a lasting policy framework, urging the Union to place the matter before the GST Council on a priority basis.

Why This Matters

BozokMedia analysis shows that relieving GST pressure on these agro‑forestry crops could revitalize rural economies in Andhra Pradesh, reduce dependence on imported wood chips, and strengthen the domestic paper‑pulp supply chain.

"If the government swiftly implements this tax relief, it will boost farmer incomes while supporting environmental sustainability," says agricultural economist Anita Rao.
Did You Know?: Subabul wood is prized globally for high‑grade paper production and serves as a carbon‑sequestering resource against climate change.

Frequently Asked Questions

Question 1: What benefits would classifying Subabul and Eucalyptus as agricultural products bring?
Answer: It would qualify them for GST exemption or a reduced rate, directly improving farmer profitability.

Question 2: When can this issue be taken up by the GST Council?
Answer: It could be placed on the Council’s agenda in the next fiscal year, contingent on government priority and committee recommendations.