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

Kiran Agro Ltd grows and cures coffee in Karnataka and sells it, without roasting or grinding. Its income from the sale, computed as business income, is Rs 60,00,000. Under Rule 271 of the Income-tax Rules, 2026, what amount is deemed to be income liable to tax?

Rs 15,00,000 is liable to tax. Coffee that is grown and cured, but not roasted and ground, falls under the 25% category in Rule 271, and 25% of Rs 60,00,000 is Rs 15,00,000. The 40% rate applies only to roasted and ground coffee.

  1. ARs 15,00,000Correct
  2. BRs 21,00,000
  3. CRs 24,00,000
  4. DRs 30,00,000

Explanation

Item 2 of the Rule 271(1) table applies to coffee grown and cured by the seller in India, at 25%. 25% of Rs 60,00,000 is Rs 15,00,000. Rs 24,00,000 uses 40%, which applies only if the coffee is also roasted and ground, or to tea. Rs 21,00,000 uses the rubber rate of 35%.

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