TAMIL NADU HORTICULTURE DEVELOPMENT AGENCY

From To

Tmt. Archana Patnaik, I.A.S., Registered Micro Irrigation Firms

Managing Director,
TANHODA,
Chepauk, Chennai-600 005.

MIS1/7250 /2016 dated: 20.11.2017

Madam/Sir,

Sub: TANHODA - Implementation of Micro Irrigation Scheme under

Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) 2017-18 -
GST absorbed by State Government in State Additional Share-
Uniform unit cost for MI Components - C?mmunicated - Reg.

Ref: 1. Meeting held with the Micro Irrigation Companies on

01.09.17,13.09.17 and 13.10.17.
2. G.O. (Ms) No.283, Agriculture (H1) Department dated
17.11.2017.

During the year 2017-18, 36 Micro Irrigation Companies have been

registered with TANHODA with the approval of State Level Sanctioning Committee
(SLSC) for implementing the micro irrigation scheme. Each Micro Irrigation Company
had earlier proposed their own pricing system for individual components and as the
entire system cost was as per the Indicative Cost mentioned in the PMKSY guidelines
issued by Government of India, the prices were approved.

Introduction of 18% GST on Drip and Sprinkler Irrigation Systems from

01.07.2017 escalated the cost of MI systems. As per the Government directions, in
order to reduce the cost of MI systems and to make it affordable to the farmers, three
rounds of meeting were held with the Micro Irrigation Companies on 01.09.2017,
13.09.2017 and 13.10.2017 along with the officials from the Department of Agriculture,
,
Agricultural Engineering and Commercial Taxes to discuss about GST, Input Tax Credit
applicable on Micro Irrigation Systems and the possibility of reducing this Input Tax
Credit by the MI Companies so as to reduce the burden on farmers due to GST
implementation. The issue of disparity in costs of same component was also discussed
and negotiations were held with the Companies to adopt uniform pricing system for all
components and reduce the cost of the MI Components based on Input Tax Credit.
Post discussion, following decisions were taken for implementing MI during 2017-18:

1. All the Micro Irrigation Companies after discussion have unanimously

agreed for adoption of uniform unit cost for all components of MI (The
uniform cost arrived by MI companies is enclosed).
2. MI companies agreed to reduce 8% average Input Tax Credit from the
base cost of the materials.

Based on the outcome of the discussions, a proposal on GST was submitted to

the Government on basis of reduced component cost of MI system. The Government
after careful examination, accepted the proposal and accorded permission vide
reference 2nd cited to absorb the GST within State additional share thereby reducing
the proposed area of implementation of 1st installment release from 79,912 ha to
67,723 ha. The base cost of the MI system as per PMKSY guidelines issued by
Government of India on 25.08.2017 and the revised rate based on Input Tax Credit
including 18% GST is given below for illustration:

Cost of Drip Irrigation per hectare

Revised Cost of MI System

Final Cost
Indicative cost including GST
as per PMKSY Revised cost 18% GST (Rs) - To be
Spacing (mxm) guidelines (Rs.) based on Input applicable released to MI
Tax Credit (Rs.) (Rs) Companies

12x12 21643 20190 3634 23824

10x10 23047 22426 4037 26463
9x9 24035 23464 4224 27688
8x8 25332 24795 4463 29258
6x6 30534 29257 ' 5266 34523
5x5 34664 33074 5953 39027
4x4 36562 35981 6477 42458
 2.5x2.5 60065 53183 9573 62755

2x2 73138 64828 11669 76496

1.5x1.5 85603 75755 13636 89390

2.5xO.6 63145 56635 10194 66829

1.8xO.6 80599 72442 13040 85481

1.2xO.6 (or
lower spacinq) 112237 101012 18182 119194

Cost of Sprinkler Irrigation per hectare

Indicative
Revised Cost of MI System
Cost as per Revised Final Cost
PMKSY rate based including GST
guidelines on Input 18% GST (Rs) - To be
S.No Type (Rs.) Tax Credit applicable released to MI
'(Rs.) . (Rs) Companies

1 Portable Sprinkler
63 mm coupler 19542 18630 3353 21983
75 mm coupler 21901 20780 3740 24520
2 Micro Sprinkler
5x5 spacing 58932 39841 7171 47012
3x3 spacing 67221 63202 11376 74578
3 Mini Sprinkler
1Ox10 spacing 85212 58418 10515 68933
8x8 spacing 94028 71269 12828 84097
4 Semi Permanent 36607 25904 4663 30567
5 Rain Gun
63 mm coupler 28681 27230 4901 32131
75 mm coupler 34513 32300 5814 38114

The above GST calculation is made on the total system cost as given in unit cost
table of PMKSY guidelines for both Small/Marginal farmers and Other farmers. This
GST amount will be absorbed in the State additional share and paid to Micro Irrigation
Companies along with subsidy amount both for small/marginal farmers and other
farmers. In case of Other farmers (75% subsidy), only the 25% farmer contribution
should be collected. The GST is applicable only for the unit cost of the components
given in the BOa table. For additional components, the GST applicable for it can be
collected from the farmer.

The calculated uniform unit cost for all components and BOa table as per the
indicative cost of Government of India guidelines which will be adopted for the current
empanelment is communicated herewith. The Micro Irrigation Firms are requested to
involve themselves and ensure that substantial progress is made.

Sd/- ARCHANA PATNAIK

Managing Director

Encl: 1. Unit cost of MI Components

2. BOa of Drip and Sprinkler

-
Copy submitted to: The Agriculture Production Commissioner and
Principal Secretary to Government,
Agriculture Department, Chennai-600 009.

Copy to: The Director of Agriculture,

Chepauk, Chennai-600 005 - for onward communication to Joint Directors
of Agriculture
Copy to: The Chief Engineer,
Agricultural Engineering Department, Chennai - for onward communication
to District Officials

Copy to: The Commissioner of Sugars

Chennai

Copy to: The Executive Director

TAWDEVA, Chennai

Copy to: The Joint Directors of Horticulture, Ooty and Krishnagiri

All Deputy Directors of Horticulture

11 By Orderll