Rule 271: Taxable share of income from rubber, coffee and tea
Rule 271, made under section 533(2)(b)(i), covers composite income from growing and processing rubber, coffee and tea in India. The income is first computed as if it were business income, and then only the percentage in the Table is treated as income liable to tax: 35% for specified rubber products, 25% for coffee grown and cured, 40% for coffee grown, cured, roasted and ground, and 40% for tea grown and manufactured. A replanting allowance is available.
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Bare law
Rule 271 - Income from manufacture of rubber, coffee and tea
(1) In terms of section 533(2)(b)(i), incomes specified in column B of the following Table, shall be computed as if it were incomes derived from business and the percentage of such incomes specified in column C thereof shall be deemed to be the income liable to tax.
Table Sl. No. (A) Nature of income (B) Percentage (C) 1. Income derived from the sale of centrifuged latex or cenex or latex-based crepes (such as pale latex crepe) or brown crepes (such as estate brown crepe, remilled crepe, smoked blanket crepe or flat bark crepe) or technically specified block rubbers manufactured or processed from field latex or coagulum obtained from rubber plants grown by the seller in India 35% 2. Income derived from the sale of coffee grown and cured by the seller in India 25% 3. Income derived from the sale of coffee grown, cured, roasted, and grounded by the seller in India with or without mixing chicory or other flavouring ingredients, 40% 4. Income derived from the sale of tea grown and manufactured by the seller in India 40% (2) In computing the income specified in sub-rule (1), an allowance shall be made in respect of the cost of planting rubber plants, coffee plants and tea bushes, as the case may be, in replacement of plants or bushes that have died or become permanently useless in an area already planted, if such area has not previously been abandoned.
(3) For the purposes of determining such cost referred to in sub-rule (2), no deduction shall be made in respect of the amount of any subsidy, which, under the provisions mentioned in Schedule III [Table: Sl. No. 21] to the Act is not includible in the total income.
(4) For the purposes this rule, the expression "curing" shall have the same meaning as assigned to it in section 3(d) of the Coffee Act, 1942 (7 of 1942).
Rule breakdown
Percentages: Rule 271(1)
Rubber (centrifuged latex, cenex, latex-based or brown crepes, technically specified block rubbers from own plants): 35%.
Coffee grown and cured by the seller: 25%.
Coffee grown, cured, roasted and ground by the seller (with or without chicory or other flavouring): 40%.
Tea grown and manufactured by the seller: 40%.
Replanting allowance: Rule 271(2) and (3)
Allowance for the cost of planting rubber plants, coffee plants or tea bushes to replace those that died or became permanently useless, in an area already planted and not previously abandoned.
In working out that cost, no deduction is made for a subsidy that is not includible in total income under Schedule III [Table: Sl. No. 21].
Curing
"Curing" has the meaning in section 3(d) of the Coffee Act, 1942 (Rule 271(4)).
Key takeaways
Compute as business
Whole income is first computed as business income.
Then apply percentage
Only 35%, 25% or 40% is taxable.
Replanting
Allowance for replacing dead plants in planted areas.
Practical checklist
- Classify each product line into the correct Table entry.
- Keep replanting records by area.
Avoid
- Do not reduce replanting cost by an exempt Schedule III subsidy; Rule 271(3) says no deduction is made for it.
FAQs
What share of tea income is taxable?
40% of the income computed as business income, for tea grown and manufactured by the seller in India.
What share of coffee income is taxable?
25% if grown and cured; 40% if grown, cured, roasted and ground by the seller.
Is replanting cost allowed?
Yes, for replacing plants or bushes that died or became permanently useless in an area already planted that was not abandoned (Rule 271(2)).
Glossary
- Curing
- As defined in section 3(d) of the Coffee Act, 1942.
- Replanting allowance
- Allowance under Rule 271(2) for replacing dead or useless plants in planted areas.