Rule 271 — Income from manufacture of rubber, coffee and tea. Made under s.533 of the Income-tax Act, 2025.
Rule 271 gives effect to Section 533 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.
Sub-rule (1) provides, in terms of section 533(2)(b)(i), that the incomes specified in column B of the Table shall be computed as if they were incomes derived from business, and that the percentage specified in column C shall be deemed to be the income liable to tax. The Table has four entries. Income 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%. Income from the sale of coffee grown and cured by the seller in India: 25%. Income 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%. Income from the sale of tea grown and manufactured by the seller in India: 40%.
Sub-rule (2) requires that, in computing the income in sub-rule (1), an allowance be made for the cost of planting rubber plants, coffee plants and tea bushes in replacement of plants or bushes that have died or become permanently useless in an area already planted, provided that area has not previously been abandoned. Sub-rule (3) provides that in determining that cost no deduction shall be made for 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. Sub-rule (4) gives "curing" the meaning assigned in section 3(d) of the Coffee Act, 1942.
Growing is agriculture and manufacture is business, and where the same person does both, the sale proceeds of rubber, coffee and tea carry an agricultural element the State taxes and a business element the Union taxes. The section leaves the split to be prescribed and this rule fixes it as a percentage for each product, so the division is made by a fixed proportion rather than by accounting for the notional value of the crop at the factory gate. Sub-rules (2) and (3) then deal with the one cost peculiar to these plantations, replanting, and stop a subsidy that is not taxable from being deducted from it as well.
| What | Figure | The condition on it | Where |
|---|---|---|---|
| Portion of income deemed liable to tax on sale of rubber products | 35% | Sale of centrifuged latex, cenex, latex-based crepes, brown crepes or technically specified block rubbers manufactured or processed from field latex or coagulum obtained from rubber plants grown by the seller in India | Rule 271(1), Table Sl. No. 1 |
| Portion of income deemed liable to tax on sale of cured coffee | 25% | Coffee grown and cured by the seller in India | Rule 271(1), Table Sl. No. 2 |
| Portion of income deemed liable to tax on sale of roasted and ground coffee | 40% | Coffee grown, cured, roasted and grounded by the seller in India, with or without mixing chicory or other flavouring ingredients | Rule 271(1), Table Sl. No. 3 |
| Portion of income deemed liable to tax on sale of tea | 40% | Tea grown and manufactured by the seller in India | Rule 271(1), Table Sl. No. 4 |
The percentage applies to income computed as if it were income derived from business, so the whole computation is done first on business principles and only then is the fraction taken; the percentage is not applied to sale proceeds. Which entry applies turns on how far the seller has taken the product: coffee merely grown and cured is at 25%, but the same coffee roasted and ground is at 40%, and mixing chicory or other flavouring does not change that. Every entry requires the plant or crop to have been grown by the seller in India, so a manufacturer working on bought-in raw material is not within the rule at all. The replanting allowance in sub-rule (2) is confined to replacement within an area already planted that has not previously been abandoned, and under sub-rule (3) the cost is not to be reduced by a subsidy that Schedule III [Table: Sl. No. 21] keeps out of total income.
A company grows and cures coffee in India and sells it. Its income from the sale, computed as if it were income derived from business, is Rs 2 crore. Under Table Sl. No. 2, 25% of that, being Rs 50 lakh, is deemed to be the income liable to tax. If the same company had also roasted and ground the coffee before sale, Table Sl. No. 3 would apply and Rs 80 lakh would be liable to tax.
You meet it in the computation attached to the return of a rubber, coffee or tea grower who also processes what it grows, where the business income is worked out in full and then reduced to the Table percentage.
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
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