Arjuna (Fictional Character): Krishna, we are in the middle of the mango season. Around 21 million metric tons of mangoes are said to be produced in India in FY 22–23, making it the largest producer of mangoes globally. What is your view on this love story between Indians and mangoes?
Krishna (Fictional Character): Arjuna, this story between Indians and their love for mangoes is not new. You see a lot of people eagerly waiting for the summer season just to be able to enjoy the mangoes. We even have a lot of sayings in Hindi on mango (Aam), for example, "Aam toh Aam aur Gutlhiyo Ke Daam," which means to make the most of something. However, have you wondered how the taxation on the sale of mangoes works? Have you ever thought about "Aam toh Aam par kya Ghutliyo pe Hai Daam (Tax)?" Taxation on mangoes depends on who is the seller and in what form he is selling mango. It is surely an interesting topic for discussion.
Arjuna (Fictional Character): Krishna, is there a tax on mango if it is sold by a farmer?
Krishna (Fictional Character): Arjuna's growing of mangoes by farmers is covered under Agriculture Income, which is exempt under Income Tax Act Section 10(1). There is no restriction over the region of land; that is, even if you grow mangoes on urban land and sell them in their original form, they will still be considered agricultural income and thus will be exempt. The sale of mango in its original form is also not taxable under GST, and thus neither farmers nor buyers would be required to pay GST under RCM.
Arjuna (Fictional Character): Krishna, what if mangoes are sold by traders after being purchased from farmers?
Krishna (Fictional Character): Arjuna, The sale of agricultural produce by only growers is covered by agricultural activity, and mere trading of agricultural produce would thus be outside of agricultural activity. Thus, if you buy mango or any other fruit from a farmer and make further supply of it, you would not be eligible for exemption under Section 10(1), and you would be liable to income tax. However, as the mango is still in its original form, no GST is to be levied on it, and consumers can enjoy the mango at a cheaper rate.
Arjuna (Fictional Character): Krishna, How is taxation on the sale of processed mango products?
Krishna (Fictional Character): Arjuna, if mango is sold by processing units as mango juice, then it will be classified under HSN 22029920, which is the supply of fruit pulp or fruit juice-based drinks, and GST on which is taxed at 12 percent. If mango ice cream is sold, then that will be classified under HSN 21050000, and GST will be levied at 18%. Ice cream producers or manufacturers cannot opt for the composition levy and thus have to only charge 18 percent GST on it. However, retailers who only sell ice cream and do not produce it can opt for the composition levy and pay GST at just 1 percent. If mango pickles are sold, then they will be taxable under 12 percent. As far as income tax is concerned, processing mango and selling it as processed products do not form part of agriculture activity, and thus income earned from such sales shall also be taxable under income tax.
Arjuna (Fictional Character): Krishna, What should one learn from this?
Krishna (Fictional Character): Arjuna, mangoes can represent the joy we have in our lives, and as the saying goes, "Aam Khao Guthliya Mat Gino," the joys in life are not to be counted. However, like every Aam has its Daam, we shall be aware of how and to what extent we are paying for these joys; in other words, how much tax goes out of our pockets in spending for these joys. Everything said, enjoy the summer and enjoy the mangoes.
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