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Section 80P Deduction for Farm Producer Companies

Section 80P deduction to Farm Producer Companies (FPC), having a total turnover upto Rs 100 Crore, whose gross total income includes any income from- (i) the marketing of agricultural produce grown by its members, or

Union Budget 2018- Deduction in respect of income of Farm Producer Companies

Section 80P provides for 100 percent deduction in respect of profit of cooperative society which provide assistance to its members engaged in primary agricultural activities.

It is proposed to extend similar benefit under Section 80P to Farm Producer Companies (FPC), having a total turnover upto Rs 100 Crore, whose gross total income includes any income from-

(i) the marketing of agricultural produce grown by its members, or

(ii) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or

(iii) the processing of the agricultural produce of its members

The benefit shall be available for a period of five years from the financial year 2018-19.

This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-20 and subsequent assessment years.

Extract of Clause 28 of Finance Bill 2018

Clause 28 of the Bill seeks to insert a new section 80PA of the Income-tax Act relating to deduction in respect of certain income of Producer Companies.

It is proposed to insert the said new section so as to provide that in case of an assessee, being a Producer Company, having a total turnover of one hundred crore rupees or less in any previous year, the gross total income includes any income from the marketing of agricultural produce grown by its members, or the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or the processing of the agricultural produce of its members, the whole of the amount of income or profits and gains and business attributable to any one or more of such activities shall be deducted in computing the total income of the assessee for the previous year relevant to any assessment year commencing on or after the 1st day of April, 2019, but before the 1st day of April, 2025.

It is further proposed to provide that where the assessee is entitled also to deduction under any other provision or provisions of Chapter VIA, the deduction under this section shall be allowed from the gross total income as reduced by the deductions under such other provision or provisions of the said Chapter.

It is also proposed to define the expressions “eligible business”, “member” and “Producer Company” for the purposes of the said new section.

These amendments will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019- 2020 and subsequent years.

Categories: Income Tax

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