Rule 271 of the Draft Income-tax Rules, 2026 provides the method for computing taxable income arising from the manufacture and sale of rubber, coffee, and tea under Section 533 of the Income-tax Act. The rule recognises that such activities involve both agricultural operations (growing the crop) and business processes (manufacturing or processing). Accordingly, the income from these activities is treated as business income, but only a specified percentage is deemed taxable. Under the prescribed table, 35% of income derived from the sale of centrifuged latex, latex-based crepes, brown crepes, or technically specified block rubber manufactured from rubber plants grown by the seller in India is taxable. Similarly, 25% of income from the sale of coffee grown and cured by the seller in India is taxable, while 40% of income from coffee grown, cured, roasted, and ground by the seller—with or without chicory or other flavouring ingredients—is taxable. In the case of tea grown and manufactured by the seller in India, 40% of the income is considered taxable business income. The rule further allows deduction of the cost of planting rubber plants, coffee plants, or tea bushes to replace those that have died or become permanently useless in areas already under cultivation, provided such areas have not been abandoned earlier. However, while determining such replacement costs, any subsidy amount that is excluded from total income under the relevant schedule cannot be deducted again. Additionally, the rule clarifies that the term “curing” for coffee has the same meaning as defined under the Coffee Act 1942.
Extract of Rule No. 271 of Draft Income-tax Rules, 2026
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 table below, shall be computed as if it were income derived from business and the percentage of such incomes specified in column C shall be deemed to be the income liable to tax.
TABLE
| Sl. No. | Nature of income | Percentage |
| A | B | 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] is not includible in the total income.
4. For the purposes this rule “curing” shall have the same meaning as assigned to it in section 3(d) of the Coffee Act, 1942 (7 of 1942).
