Agricultural Machinery Rental Services Under SAC Code 997312
Agricultural machinery rental services help farmers and agri businesses use tractors, harvesters, seeders and other farm equipment without buying them outright. Instead of blocking money in machines, they pay rent for the actual season or period of use. This makes farm equipment leasing affordable and practical for small and medium farmers. Under GST, such agricultural machinery rental services are classified under SAC 997312. This SAC code and its GST rate decide how GST will be charged on agricultural machinery rental bills and related service charges.
Agricultural Machinery Rental Services GST Rate for SAC Code 997312
Leasing and rental services under group 9973 are treated as supply of services under GST, even when the underlying item is a movable good. The taxable value usually includes the base rental charge, operator or driver fees where machines are supplied with manpower and any maintenance or handling fees that form part of the contract. Refundable security deposits and pure reimbursements of government levies can be kept outside the taxable value only when the conditions given in GST law are fully met.
After the September 2025 GST rate changes, most taxable leasing and rental services that are not covered by a special concessional entry are generally placed in the 18% slab with input tax credit for eligible registered business customers. Service providers should still check the latest notifications and circulars, as certain government schemes or specified sectors may enjoy different treatment for particular types of rental contracts.
The table below summarises the latest standard GST rate for SAC code 997312 for agricultural machinery rental services.
| Code | Description | Old GST Rate (till 21 Sep 2025) |
New GST Rate (from 22 Sep 2025) |
Notes on change / inclusions |
|---|---|---|---|---|
| 997312 | Leasing or rental services concerning agricultural machinery and equipment with or without operator | 0% without ITC or 18% with ITC | 0% without ITC or 18% with ITC | Multiple independent sources list this code as Nil where agricultural machinery is rented to farmers for agricultural operations, aligning with the exemption for certain agri support services. Where the same machinery is leased for non agricultural or commercial use, it is treated as a normal taxable service at 18%. The 56th Council did not alter this pattern of exemption plus standard rate. |
Once the correct GST rate is identified, rental providers should apply that rate in % on the taxable rental value, mention the SAC code clearly on invoices and keep their GST positions consistent across contracts and returns so that customers can plan cash flow and input tax credit smoothly.
Explore Other SAC Codes Under 9973
All these SAC codes fall under the broader leasing and rental services group 9973, which covers rental of machinery, equipment and other goods with or without operator. Each six-digit SAC within this group points to a specific type of rental service so that GST classification and reporting remain clear and structured.
The list below highlights key six-digit SAC codes under 9973.
Service providers should select the SAC that matches the main equipment being rented, whether it is agricultural machinery, construction equipment, office machines, computers or telecom and network gear. Using the correct six digit SAC and GST rate in % makes billing more transparent, supports proper input tax credit for customers and reduces the risk of disputes during GST reviews.
Conclusion
SAC 997312 covers agricultural machinery rental services where tractors, harvesters and other farm equipment are given on hire for agricultural work. These services are normally taxed at 18% under GST, with input tax credit for eligible registered farmers and agri businesses. By using SAC 997312 correctly and applying the right GST rate in %, both service providers and customers can manage seasonal farm equipment leasing without confusion in billing or compliance.
Important Disclaimer
The entire content on this page has been arranged to the best of the author's understanding and is subject to periodic updates as per the law for the time being in force. The above does not constitute professional advice or a formal recommendation. While due care has been taken in preparing this content, the existence of mistakes and omissions cannot be ruled out. BUSY Infotech Private Ltd. and its associates will not be held responsible for any loss or damage arising from any inaccurate or incomplete information in this document. We recommend consulting a professional tax consultant before acting on the information contained in this piece of content.
Frequently Asked Questions
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What does SAC code 997312 cover in GST?
SAC 997312 covers rental and leasing services of agricultural machinery and farm equipment. This includes tractors, harvesters, seeders, sprayers and similar implements supplied on hire to farmers or agri businesses. The service provider earns rental income while ownership of the machinery remains with the lessor.
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Does SAC 997312 include rental of agricultural machinery and farm equipment?
Yes. Hiring tractors for ploughing, harvesters for cutting crops or other specialised farm machines is generally classified under SAC 997312. It applies whether the equipment is given with an operator or on bare rental, as long as the arrangement is clearly a rental or leasing service.
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What GST rate applies to agricultural equipment rental under SAC 997312?
Agricultural machinery rental under SAC 997312 is often taxed at 18%, but some specific services to farmers may enjoy exemptions or lower rates depending on current notifications. Service providers should review the latest GST circulars to see whether their activity qualifies for any agri-related concession.
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Are tractor and harvester rentals billed using SAC 997312?
Yes. When tractors, harvesters or similar farm equipment are hired out for field work, invoices should usually mention SAC 997312. This applies whether the customer is an individual farmer, a cooperative or an agri company. Clear description helps establish that it is a rental service, not a works contract.
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Can farmers or agri-businesses claim ITC on SAC 997312 where registered?
Registered agri businesses engaged in taxable supplies can generally claim ITC on GST paid on SAC 997312 services. Small farmers who are not registered usually cannot claim credit. Eligibility depends on registration status, nature of outward supplies and whether any specific exemption conditions require reversal of credit.