2) can it earn profit by agriculture from such land?
3) is this profit is taxable or not?
4)if i have one company with certificate of commencement of business, than what can now i do to take agricultural land in my company's name? post script: i am not registered agricultural land holder.
18 March 2010
Corporate farming is in place in India and many MNCs and well known Indian companies are already operating in this sector.The law therfore does permit such operations Contract farming is practised where the company does not own the land but gives the farmer all necessary inputs with an assurance that the entire or part of the harvest will be purchased by the sponsering company.This is quite popular with the corporates in India.FIs and Ins Cos also chip in.
14 July 2024
Certainly! Here are answers to your queries regarding a company holding agricultural land and the tax implications in India:
1. **Can a Company Hold Agricultural Land?**
- Yes, a company can hold agricultural land in India. However, there are certain regulations and restrictions that vary from state to state. In some states, there may be limits on the maximum area of agricultural land that a company can hold.
2. **Can a Company Earn Profit from Agriculture on Such Land?**
- If a company owns agricultural land, it can engage in agricultural activities and earn income from farming, horticulture, or any other agricultural practices.
3. **Taxability of Profit from Agriculture:**
- Income derived from agricultural activities on agricultural land qualifies as agricultural income under the Income Tax Act, 1961. - Agricultural income is exempt from income tax in India under Section 10(1) of the Income Tax Act. Therefore, the profit earned from agricultural activities conducted by the company on its agricultural land would not be taxable.
4. **Procedure to Transfer Agricultural Land to the Company:**
- Since you already have a company with a certificate of commencement of business and wish to acquire agricultural land in its name, you would need to follow these steps: - **Legal Consultation**: Seek advice from a legal expert or a property lawyer specializing in agricultural land transactions in your state. They can guide you through the specific requirements and regulations applicable to the acquisition of agricultural land by companies. - **Compliance Check**: Ensure compliance with all state-specific laws, such as land ceiling limits, permissions from agricultural authorities, and any other regulatory approvals required for the purchase of agricultural land. - **Registration**: Execute a sale deed or transfer deed to transfer ownership of the agricultural land to the company. This typically involves paying stamp duty and registering the transaction with the Sub-Registrar of Assurances. - **Documentation**: Maintain proper documentation, including the sale deed, payment receipts, and other relevant records. - **Tax Implications**: Since agricultural income is exempt from income tax, ensure proper classification and documentation of income earned from agricultural activities on the land owned by the company.
### Post Script:
If you are not currently a registered agricultural landholder, it's important to understand and comply with all legal requirements and regulations specific to your state before proceeding with the acquisition of agricultural land by your company. Consulting with legal and tax advisors can help ensure smooth compliance with all regulatory requirements and optimize your approach to managing agricultural activities and income under corporate ownership.
CAclubindia
