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Tea, coffee and rubber given importance in taxation

rohit (Article) (61 Points)

31 January 2016

Why only tea, coffee and rubber are bifurcated in to Agricultural and Non Agricultural income for taxation purpose on some predetermined basis(60:40, 75:25 etc)? why is it not so in case of other crops?

Regards,

Rohit

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CA Hariprasad Nayak (Chartered Accountant) (221 Points)
Replied 31 January 2016

Hi Rohit,

My logic and opinion is as follows-

These are the major COMMERCIAL crops grown in India, people having fair amount of income from growing them. Many people grow it, there are many people who just process it after buying it from plantations and there are many who do both activities of growing and processing it. The rules set out in Income tax are meant for the this third category of people.

If you see the definition of agriculture you see that income includes income from processing to make the products marketable (agricultural products need some preliminary processing before being taken to market). The definition seeks to include only preliminary processing not not advanced refinement which takes characteristics of business income.

Processsing, as you may be aware is complex for these 3 products and there are many stages involved in it. Lawmakers must have thought, having regard to the nature of extensive processing required for these three products, sometimes it may be difficult to arrive at a point where the agriculture activity ends and where the business activity starts. Therefore they have prescribed income classification rules to avoid any disputes later on.

Hope the above clarifies. This was just my logic-others' view are welcome.

CA Hariprasad Nayak

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rohit (Article) (61 Points)
Replied 06 February 2016

thank you sir,

I think in the same way. Although there are many more other crops but Lawmakers would have given specific attention to tea, coffee and rubber because of its worth and to bring the people who are in the production and processing of these crops under tax net.

Regards,

Rohit Gawas