Income tax in dairy farming

Income tax in dairy farming

1) Is presumptive taxation applicable in dairy farming (collecting milk from cows and selling to dairy co-operatives) turnover of 1.2 cr. Also I am filing as an individual and the payments are online NEFT in nature so the taxable income would be 6% of gross income and post that tax according to slab would be applied? Example of Rs.1 cr gross income taxable income would be Rs.6 lac and income tax to be paid is Rs.45000. Now my actual net income is coming to 22% of gross would that be an issue in presumptive taxation i.e I would have to pay income tax over 6% based on actual taxable income

2) If I want to show deductions in dairy farming and not go for presumptive tax
a) I am currently producing green fodder (hyrid napier) for 30 cows which is used at 30 kg per cow/day which comes to around 320 tons per year. Market price of this green fodder is Rs.4-4.25 (after logistics cost, Rs.2.5 is the price without logistics ). I want to show this green fodder as an expense at market price, my cost of production is around Rs.1. Logic being I save 3 rs per kg because of captive consumption also I could have got Rs.4 per kg by selling in the market. Can I show green fodder as an expense at market price at an individual level or I have to form an entity. Also there is no way to maintain records of amount of fodder consumed as end product is milk, however any one would corroborate the fact that 30 kg green fodder is required per cow and that there is green fodder growing in 4 acres land parcel adjacent to the dairy farm.

Asked 8 years ago in Income Tax

Hello,

You can file your returns under Section 44AD. It is not mandatory to show 8 or 6% profits but the minimum percent is 8%. You can very well show a higher percent. If in your case you are not in a position to prove your expenses by maintaining all the requisite documents, you can file your return u/s 44AD and then show a higher percent i.e 20-25% as your profits.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma

CA, Mumbai

2104 Answers

95 Consultations

Talk to Rohit R Sharma

Thanks Rohit.

However under under Section 44AD do I have to actually calculate my net income (for cases where net income greater than 8% ) or can I just fill the income tax based on 8% of gross income, its difficult to maintain bills as a lot of the input material is produced at the farm itself.

Additionally awaiting a response on the second part of the question. As if I include green fodder at market price in my expenses than my net income goes below 8% so it makes more sense to maintain documents.

Asked 8 years ago

"Additionally awaiting a response on the second part of the question. As if I include green fodder at market price in my expenses than my net income goes below 8% so it makes more sense to maintain documents."
I.e go for tax audit

Asked 8 years ago

I hope your first question is adequately resolved.

Coming to the second question, you can't show expense at the market value. You can only show expense to the extent cost incurred by you for growing green fodder.

Please feel free to call/ revert in case you need more clarity

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar

CA, Mumbai

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Talk to Abhishek Dugar

Hi,

I understand most of the queries have been answered. Regarding the green fodder, you cannot account for it at the market price, because it is notional. You can account for only actual expenses incurred at the price at which they were incurred.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LL.B

Keerthiga Padmanabhan

CA, Greater Mumbai

784 Answers

27 Consultations

Talk to Keerthiga Padmanabhan

Hello,

No, records are not required to be maintained but you can willfully declare a higher income.

Yes, you may go with it and get your books audited. But with audit comes compliance, cost burden, chances of scrutiny etc. So it is up to you to consider the pro and cons and then take your decision.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma

CA, Mumbai

2104 Answers

95 Consultations

Talk to Rohit R Sharma

Thanks Rohit

Under section 44AD, for cases where net income is above 8% of gross, and where you pay tax according to actual net income. Is there a possibility of income tax inquiry in this case considering that its difficult to maintain and produce the relevant documents.