FILING OF RETURN OF INCOME BY THE COFFEE GROWERS BEING INDIVIDUALS COVERED BY RULE 7B OF THE INCOME TAX RULES, 1962 – CLARIFICATION REGARDING.

CIRCULAR NO. 10/2006, DATED 16-10-2006

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Reference is invited to Board’s Circular No. 10/2003 dated 24th December, 2003 which provided that an individual deriving income from growing and curing of coffee who is not covered by the first proviso to section 139(1) of the I.T. Act, would not be required to file a return of his income if his income from growing and curing of coffee was Rs. 2 lakhs or less. The Finance Act, 2005 has subsequently raised the exemption limit for individual taxpayers from Rs. 50,000 to Rs. l lakh from the Assessment year 2006-07. The exemption limit in the case of an individual, being a woman resident in India and below the age of 65 years, has been increased to Rs. 1,35,000. In the case of an individual, being a resident in India, who is of the age of 65 or more at any time during the previous year, the exemption limit has been raised to Rs. 1,85,000.

  1. The Board has reconsidered the matter of filing of return by the individual coffee growers in order to provide further relief to them and it is clarified that:

(i) An individual deriving income from growing and curing of coffee would not be required to file his return, if the aggregate of 25% of his income from growing and curing of coffee and income under all other sources liable to tax in accordance with the provisions of this Act, is equal to or less than the exemption limit (1st slab of the rates of Income-tax) prescribed for individual tax payers in the first Schedule of the Finance Act of the relevant year. Therefore taking Assessment Year 2006-07 as an example,

(a) An individual derives income from growing and curing of coffee = Rs. 4,00,000
Other income = Nil
Taxable income under Rule 7B(1) of the IT Rules, 1962 is 25% of Rs. 4,00,000 = Rs. 1,00,000
No return is required to be furnished.
(b) An individual derives income from growing and curing of coffee = Rs. 3,00,000
Other income = Rs. 25,000
Taxable income under Rule 7B(1) of the IT Rules, 1962 is 25% of Rs.3,00,000 + Rs.25,000 = Rs. 1,00,000
No return is required to be furnished.
(c) A woman resident in India below the age of sixty five years derives income from growing and curing of coffee = Rs. 5,40,000
Other income = Nil
Taxable income under Rule 7B(1) of the IT Rules, 1962 is 25% of Rs. 5,40,000 = Rs. 1,35,000
No return is required to be furnished.
(d) An individual being a resident in India, who is of the age of sixty five years or more at any time during the previous year relevant to the Assessment Year 2006-07 derives income from growing and curing of coffee = Rs. 7,40,000
Other income = Nil
Taxable income under Rule 7B(1) of the IT Rules, 1962 is 25% of Rs.7,40,000 = Rs.1,85,000
No return is required to be furnished.

(ii) An individual deriving income from growing, curing, roasting and grounding of coffee with or without mixing chicory or other flavouring ingredients, would not be required to file the return of income if the aggregate of 40% of his income from growing, curing, roasting and grounding of coffee with or without mixing chicory or other flavouring ingredients and income under all other sources liable to tax in accordance with the provisions of this Act, is equal to or less than the exemption limit (1st slab of rates of Income tax) prescribed in the First Schedule of the Finance Act of the relevant year. Consequently for the Assessment Year 2006-07:

(a) An individual derives income from growing, curing, roasting and grounding of coffee with or without mixing chicory or other flavoured ingredients = Rs. 2,50,000
Other income = Nil
Taxable income under Rule 7B(1A) of the IT Rules, 1962 is 40% of Rs. 2,50,000 = Rs. 1,00,000
No return is required to be furnished.
(b) An individual derives income from growing, curing, roasting” and grounding of coffee with or without mixing chicory or other flavoured ingredients = Rs. 2,00,000
Other income = Rs. 20,000
Taxable income under Rule 7B(1A) of the IT Rules, 1962 is 40% of Rs.2,00,000 + Rs.20,000 = Rs. 1,00,000
No return is required to be furnished.
(c) A woman resident in India below the age of sixty five years derives income from growing, curing, roasting and grounding of coffee with or without mixing chicory or other flavoured ingredients = Rs. 3,37,500
Other income = Nil
Taxable Income under Rule 7B(1) of the IT Rules, 1962 is 40% of Rs. 3,37,500 = Rs. 1,35,000
No return is required to be furnished.
(d) An individual being a resident in India, who is of the age of sixty five years or more at any time during the previous year relevant to the Assessment Year 2006-07 derives income from growing, curing, roasting and grounding of coffee with or without mixing chicory or other flavoured ingredients = Rs. 4,62,500
Other income = Nil
Taxable Income under Rule 7B(1) of the IT Rules, 1962 is 40% of Rs.4,62,500 = Rs. 1,85,000
No return is required to be furnished.
  1. This may be brought to the notice of all concerned.

[F.No. 225/36/2006-ITA-II]

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