Corporatisation of agriculture and vast income potential of commercial crops have attracted the attention of accounting regulator ICAI, which for the first time is evolving accounting norms for the sector.
“So far, there are no rules and standards for the agriculture sector. How do you value tea and coffee crops or other commercial crops? We are thinking to frame some standards for the agriculture sector,” ICAI Vice-President Amarjit Chopra told PTI.
Globally, there are accounting standards for the farm sector but this is not so in India, where agricultural income is exempted from income tax.
Chopra said the producers don’t know how to value floriculture, horticulture, plantation crops like tea, coffee, rubber etc and hence the sector remains untapped.
The accounting norms become important more so when India is largely an agrarian economy, he added.
The International Accounting Standards prescribes the accounting treatment for agriculture, which includes biological transformation of living animals or plants for sale into agricultural produce or additional biological assets.
However, in India there is no accounting norm on biological assets and agricultural produce.