• Sanskar Garg

Sec 33AB of Income Tax Act, 1961: Development account of Tea, Coffee and Rubber

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An amount deposited into a ‘Deposit Account’ or ‘Special Account’ for the utilization of the same for the specified purpose is allowed as a deduction under section 33AB. A deduction under section 33AB of the Income Tax Act is available to an assessee carrying on a business in India of growing and manufacturing tea, coffee, or rubber.

An assessee engaged in growing and manufacturing tea, coffee, or rubber in India is eligible to claim a deduction under section 33AB. To claim the deduction, the assessee is required to deposit the amount in either of the following specified accounts: deposit an amount in a "special account" maintained with the National Bank; or deposit an amount in a "deposit account".

Conditon for deduction:

  • Assessee must deposit any amount in

  • an account with NABARD; or

  • a deposit account under the scheme framed by Tea Board or the Coffee Board or the Rubber Board.

  • Amount must be deposited before the due date of furnishing the return of income.


Withdrawal of amount from NABARD/ Deposit Account – Any amount can be withdrawn from NABARD/ Deposit account for the purpose specified in the scheme of Tea/ Coffee/ Rubber Board, as the case may be, or in the following circumstances:

  • a. Closure of business – taxable under PGBP in the year of withdrawal.

  • b. death of as assesse – Not Taxable

  • c. Partition of HUF–Not taxable

  • d. dissolution of firm – taxable under PGBP in the year of withdrawal.

  • e. Liquidation of company – Not Taxable

Rule 7A – Income from manufacture of Rubber: Income derived from the sale of rubber obtained from rubber plants grown by the seller in India shall be computed as if it were income derived from business, and 35% of such income shall be liable to tax.

Rule 7B – Income from manufacture of coffee: i) Income derived from the sale of coffee grown and cured by the seller in India shall be computed as if it were income derived from business, and 25% of such income shall be deemed to be income liable to tax.

  • ii) Income derived from the sale of coffee grown, cured, roasted and grounded by the seller in India, with or without mixing chicory or other flavoring ingredients, shall be computed as if it were income derived from business, and 40% of such income shall be deemed to be income liable to tax.

Rule 8 – Income from manufacture of Tea : Income derived from the sale of tea grown and manufactured by the seller in India shall be computed as if it was income derived from business and 40% of such income shall be deemed to be income liable to tax.

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