In respect of rubber manufactured from rubber plants grown by the seller in India the respective percentages are 35% and 65% i.e., 35% is business income and balance 65% of income shall be treated as agricultural income.
Rule 7A: Growing and manufacturing of Rubber in India
Income derived from the sale of centrifuged latex or cenex or latex based cops. In other words, first of all, total income/ composite income shall be calculated as follows:
| Composite income/ Total income = | Sale proceeds of rubber (i.e. industrial product) Less: Cost of cultivation (i.e. agricultural expenses) Less: Industrial expenses |
| Now, Agricultural income = | 65% of composite income |
| And Non-agricultural income = | 35% of composite income |
Then, 35% of total income of such rubber industries will be chargeable to tax under the head ‘Profit and Gains of Business or Profession’.
While computing such income, an allowance shall be made in respect of the cost of planting rubber plants in replacement of plants that have died or became permanently useless in an area already planted, if such area has not previously been abandoned. For the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which is exempt from tax u/s 10(31).
Reference:
As Per Rule 7A, of the Income Tax Act, 1961-
Income from the manufacture of rubber.
7A. (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 shall be computed as if it were income derived from business, and thirty-five per cent of such income shall be deemed to be income liable to tax.
(2) In computing such income, an allowance shall be made in respect of the cost of planting rubber plants in replacement of plants that have died or become permanently useless in an area already planted, if such area has not previously been abandoned, and for the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which, under the provisions of clause (31) of section 10, is not includible in the total income.