Aam Toh Aam, Par Kya Hai Guthliyo Pe Daam (Tax)?
In the midst of the vibrant Mango Season, the conversation between Arjuna and Krishna unravels the enduring bond between Indians and mangoes. With India leading global mango production, the cultural significance of this fruit is undeniable. However, amidst the celebration of this love affair, a question arises: what about the taxation on mangoes?
Arjuna (Fictional Character): Krishna, we are in the middle of the Mango Season. Around 21 million metric tons of Mangoes are said to be produced in India in the FY 22-23 making it the largest producer of Mangoes globally. What is your view on this love story between Indians and mangoes?
Krishna (Fictional Character): Arjuna, this story between Indians and their love for Mangoes is not new. You see a lot of people eagerly waiting for the summer season just to be able to enjoy the Mangoes. We even have a lot of sayings in Hindi on Mango(Aam) for eg. “Aam toh Aam aur Gutlhiyo Ke Daam” which means to make most of something. However have you wondered how is the taxation on the sale of Mangoes, like have you ever thought about “Aam toh Aam par kya Ghutliyo pe Hai Daam (Tax)? Taxation on mangoes depends on who is the seller and in what form is he selling Mango. It is surely an interesting topic for discussion.
Arjuna (Fictional Character): Krishna, is there tax on Mango if sold by farmer?
Krishna (Fictional Character): Arjuna, growing of Mangoes by Farmers is covered under Agriculture Income which is exempt under Income Tax Act Section 10(1). There is no restriction over the region of land, that is even if you grow mangoes in urban land and sell those in their original form then still it will be considered as agricultural income and thus will be exempt. Sale of Mango in its original form is also not taxable under GST, and thus neither farmers would be required to pay GST nor the buyers under RCM.
Arjuna (Fictional Character): Krishna, what if Mangoes are sold by traders after purchase from farmers?
Krishna (Fictional Character): Arjuna, Sale of Agricultural Produce by only grower is covered agricultural activity and mere trading of agricultural produce thus would be outside of agricultural activity. Thus if you buy mango or any other fruit from farmer and make further of supply of it then you would not be eligible for exemption under section 10(1) and you will be liable to Income Tax. However, as the mango is still in its original form, thus no GST is to levied on the same and consumers can enjoy the Mango at cheaper rate.
Arjuna (Fictional Character): Krishna, How is taxation on sale of processed Mango Products?
Krishna (Fictional Character): Arjuna, if Mango is sold by processing units as Mango Juice than it will be classified under the HSN 22029920 which is supply of Fruit pulp or fruit juice based drinks and GST on which is taxed at 12 percent. If Mango Ice Cream is sold, then that will be classified under HSN 21050000 and GST will be levied at 18%. Ice Cream Producers or Manufactures cannot opt for composition levy and thus have to only charge 18 Percent GST on it. However retailers who only sell ice creams and do not produce it can opt for composition levy and pay GST at just 1 percent. If Mango Pickle is sold then it will be taxable under 12 percent under. As far as Income Tax is concerned processing of Mango and sale as processed product does not form part of Agriculture activity and thus income earned from such sale shall also be taxable under Income Tax.
Arjuna (Fictional Character): Krishna, What should one learn from this?
Krishna (Fictional Character): Arjuna, Mangoes can represent the joy we have in our life and as the saying goes, “Aam Khao Guthliya Mat Gino” the joys in life are not to be counted. However like every Aam has its Daam, we shall be aware of how and to what extent are we paying for these joys, in other words how much tax goes out of our pockets in spending for these joys. Everything said, enjoy the summer and enjoy the Mangoes.
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