Skip to content

CA Final · Direct Tax Laws & International Taxation · Incomes which do not form part of Total Income

Kaveri Planters Ltd grows and manufactures tea in India and sells it for Rs 80,00,000. Under Rule 271 of the Income-tax Rules, 2026, the income is computed as if it were business income and a prescribed percentage is deemed to be the income liable to tax. What is the amount liable to tax on this basis?

Rs 32,00,000 is liable to tax. Rule 271 deems 40% of the income from sale of tea grown and manufactured by the seller in India to be taxable business income. Applying 40% to Rs 80,00,000 gives Rs 32,00,000.

  1. ARs 32,00,000Correct
  2. BRs 20,00,000
  3. CRs 28,00,000
  4. DRs 48,00,000

Explanation

Item 4 of the Table in Rule 271(1) prescribes 40% for tea grown and manufactured by the seller in India. 40% of Rs 80,00,000 is Rs 32,00,000. Rs 48,00,000 is the 60% balance and is not the taxable part, and 25% (Rs 20,00,000) applies to cured coffee.

Did you get it right without looking?

One question tells you little. A timed set on Incomes which do not form part of Total Income shows your real accuracy, how long you take and where you lose marks.

Practise Incomes which do not form part of Total IncomeFree diagnostic mock

More Incomes which do not form part of Total Income questions