Chapter IV - Computation of Total Income
Section 48
Section 48: tea, coffee and rubber development account deduction
Section 48 gives businesses engaged in growing and manufacturing tea, coffee or rubber in India a deduction based on amounts deposited into a special "development account" or deposit account, with the detailed computation, withdrawal-taxation and asset-transfer rules set out in Schedule IX of the Act.
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This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Where an assessee is carrying on business of growing and manufacturing tea or coffee or rubber in India, such assessee shall be allowed a deduction on the basis of deposits into the special account or deposit account and computed as per the provisions of the Schedule IX.
(2) Any amount withdrawn or utilised or released from the aforesaid accounts at the time of closure or otherwise shall be charged to tax as per the provisions of the Schedule IX.
(3) Where any asset acquired as per the special scheme or the deposit scheme, as referred to in the Schedule IX, is sold or otherwise transferred in any tax year, it shall be charged to tax in accordance with the provisions of the said Schedule.
Introduction
The tea, coffee and rubber development-account route ties a deduction to a qualifying deposit and its permitted use. Withdrawals and assets funded from the account have follow-on tax consequences.
Key takeaways
Plantation development deposit
A business growing and manufacturing tea, coffee or rubber in India may claim the Schedule IX deduction based on qualifying special-account deposits.
Later withdrawals and assets
Schedule IX also governs taxation when the deposited amount is withdrawn or used and when a scheme asset is transferred.
The deduction
Section 48(1) allows an assessee carrying on the business of growing and manufacturing tea, coffee or rubber in India a deduction based on deposits made into the special account or deposit account, computed as per the provisions of Schedule IX.
Taxation on withdrawal and asset transfer
Section 48(2) provides that any amount withdrawn, utilised or released from these accounts - at closure or otherwise - is charged to tax as per the provisions of Schedule IX.
Section 48(3) provides that where an asset acquired under the special scheme or deposit scheme (as referred to in Schedule IX) is sold or otherwise transferred in any tax year, that transfer is charged to tax in accordance with Schedule IX.
Track the account life cycle
Confirm the eligible plantation activity and required development-account deposit before computing the deduction.
Record each withdrawal and use against the scheme; an impermissible or unused amount can return to taxable business income under the section's rules.
Step-by-step flow for applying Section 48
- 1
Does the assessee carry on the business of growing and manufacturing tea, coffee or rubber in India?
- No: Section 48 does not apply.
- Yes: Go to the next step.
- 2
Has a deposit been made into the special account or deposit account?
Section 48(1) links the deduction to deposits into the special account or deposit account.
- No: No deduction arises under Section 48(1) for the year.
- Yes: Go to the next step.
- 3
Compute the deduction as per Schedule IX
Section 48 does not itself state the amount or ceiling of the deduction. The computation is made under the provisions of Schedule IX.
- 4
Was any amount later withdrawn, utilised or released from the account?
Section 48(2) charges such amounts to tax as per Schedule IX, whether at closure or otherwise.
- 5
Was an asset acquired under the special scheme or deposit scheme sold or transferred?
Section 48(3) charges that transfer to tax in the tax year of sale or transfer, in accordance with Schedule IX.
Practical checklist
Do
- Keep deposit certificates, account statements and scheme-compliant spending records.
- Track any asset bought from withdrawals and its statutory holding period.
Avoid
- Do not claim a second deduction for spending already funded by the deducted deposit.
Illustrative example
Worked example: a tea estate's deposit, withdrawal and asset sale
Hypothetical facts (illustration only, not a real taxpayer): A company grows tea on its own estate in India and manufactures it in its factory. In one tax year it deposits an amount into the special account. Two years later it withdraws part of the deposit and buys a machine under the scheme. Some years after that it sells the machine.
Eligibility
The company carries on the business of growing and manufacturing tea in India, so Section 48(1) can apply.
Year of deposit
The deduction is based on the deposit and is computed as per Schedule IX. This page does not reproduce Schedule IX, so no figure is worked out here.
Year of withdrawal
The amount withdrawn or utilised is charged to tax as per Schedule IX under Section 48(2). Check the Schedule for how it treats amounts used under the scheme.
Year of machine sale
The machine was acquired under the scheme, so its sale is charged to tax in that tax year in accordance with Schedule IX under Section 48(3).
Outcome
- Section 48 has tax effects at three points: the deposit, any withdrawal or release, and any later transfer of a scheme asset.
- Keep deposit, withdrawal and asset records together so that Schedule IX can be applied at each stage.
Glossary
- Development account
- The specified deposit account or scheme linked to tea, coffee or rubber development deductions.
- Withdrawal recapture
- Taxation of a withdrawn amount when statutory use conditions are not met.
Frequently asked questions
Which businesses can claim the Section 48 deduction?
Businesses carrying on growing and manufacturing of tea, coffee or rubber in India, based on deposits made into a special development account or deposit account.
Where are the detailed computation rules for this deduction?
In Schedule IX of the Act - Section 48 itself only sets out the basic entitlement, withdrawal-taxation, and asset-transfer-taxation rules, and refers the detailed mechanics to that Schedule.
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Get expert guidance on tea, coffee and rubber development account deductionsLast updated 9 October 2026