FARMER PRODUCER COMPANY

Farmer Producer Company:

 

General Definition:

A farmer producer company is a group of farmers that band together to increase their revenue and enhance their standard of life. In India, a Producer Company can be formed with merely 10 members and two institutions. In India, more than 80% of farmers are unorganized and have tiny or marginal holdings. Farmer Producer Company encourages farmers and assists them in reaching their economic potential by pursuing the following goals:

Ø  Production

Ø  Procurement

Ø  Harvesting and Grading of Fruits and Vegetables

Ø  Handling and Poling

Ø  Agricultural product marketing

Ø  Selling, exporting and importing agricultural products.

 

Income Tax:

Income tax is applicable as per the prevailing rates for the companies. The companies are subject to file their income tax return as per the provisions of Section 139 of the Income Tax Act, 1961.

 

GST:

Every Person is liable to register under the GST Act, 2017 if turnover exceeds Rs. 20 Lakhs subject to some other terms and conditions as defined in Section 22 of the CGST Act, 2017.

GST Rates on the products are given in annexure.

 

 

 

GST Rates on Products:

Sr No	Chapter/ Heading/ Sub-heading /Tarif Item	Description of Goods	Loose	Pre-packaged and labelled
45	Chapter 10	All goods i.e. cereals, put up in unit container and bearing a registered brand name, as detailed below-	0	5%
46	1001	Wheat and meslin	0	5%
47	1002	Rye	0	5%
48	1003	Barley	0	5%
49	1004	Oats	0	5%
50	1005	Maize(Corn)	0	5%
51	1006	Rice	0	5%
52	1007	Grain sorghum	0	5%
53	1008	buckwheat, millet, canary seeds	0	5%
54	1101	wheat flour and meslin flour	0	5%
55	1102	Cereal Flours other than of wheat or maslin i.e. maize flour, rye flour, etc.	0	5%
56	1103	Cereal groats, meal and pellets, including suji and dalia	0	5%
58	1105	Meal, poweder, flour, flakes, granuales and pellets of potatoes	0	5%
59	1106	Meal and powder of the dried leguminous vegetables of pulses, of sago or roots or dried makhana	0	5%

 

 

 

Income Tax Provisions:

 

Return of Income Tax

Every company is liable to file their income tax return as per the provisions of section 139.

 

Rate of Taxes:

Rate of Taxes as applicable to the Company.

25% upto turnover of Rs. 400 Crores

30% in all other cases.

Surcharge and Educations at applicable rates.

 

Deduction in respect of certain income of Producer Companies under the Income Tax Act, 1961

Section - 80PA. 

Clause (1)

Where the gross total income of an assessee, being a Producer Company having a total turnover of less than one hundred crore rupees in any previous year, includes any profits and gains derived from eligible business, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to one hundred per cent of the profits and gains attributable to such business for the previous year relevant to an assessment year commencing on or after the 1st day of April, 2019, but before the 1st day of April, 2025.

Clause (2)

In a case where the assessee is entitled also to deduction under any other provision of this Chapter, the deduction under this section shall be allowed with reference to the income, if any, as referred to in this section included in the gross total income as reduced by the deductions under such other provision of this Chapter.

Explanation.—For the purposes of this section,—

(i) "eligible business" means—

(a) the marketing of agricultural produce grown by the members; or

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

(c) the processing of the agricultural produce of the members;

(ii) "member" shall have the meaning assigned to it in clause (d) of section 581A of the Companies Act, 1956 (1 of 1956)⁵⁴;

(iii) "Producer Company" shall have the meaning assigned to it in clause (l) of section 581A of the Companies Act, 1956 (1 of 1956)⁵⁴.

Extract of The Companies Act, 1956 – Section 581A

(d) "Member" means a person or Producer institution (whether incorporated or not) admitted as a Member of a Producer Company and who retains the qualifications necessary for continuance as such ;

 

(l) "Producer Company" means a body corporate having objects or activities specified in section 581B and registered as Producer Company under this Act;

 

(m) "Producer institution" means a Producer Company or any other institution having only producer or producers or Producer Company or Producer Companies as its member whether incorporated or not having any of the objects referred to in section 581B and which agrees to make use of the services of the Producer Company or Producer Companies as provided in its articles.

 

GST Act Provisions:

 

Section 22. Persons liable for registration.-

(1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees:

Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees:

¹[Provided further that the Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified:]

²[Provided also that the Government may, at the request of a State and on the recommendations of the Council, enhance the aggregate turnover from twenty lakh rupees to such amount not exceeding forty lakh rupees in case of supplier who is engaged exclusively in the supply of goods, subject to such conditions and limitations, as may be notified:

Explanation.-For the purposes of this sub-section, a person shall be considered to be engaged exclusively in the supply of goods even if he is engaged in exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.]

(2) Every person who, on the day immediately preceding the appointed day, is registered or holds a licence under an existing law, shall be liable to be registered under this Act with effect from the appointed day.

(3) Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.

(4) Notwithstanding anything contained in sub-sections (1) and (3), in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or, as the case may be, demerger of two or more companies pursuant to an order of a High Court, Tribunal or otherwise, the transferee shall be liable to be registered, with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal.

Explanation.-For the purposes of this section,-

(i) the expression "aggregate turnover" shall include all supplies made by the taxable person, whether on his own account or made on behalf of all his principals;

(ii) the supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of goods by the principal referred to in section 143, and the value of such goods shall not be included in the aggregate turnover of the registered job worker;

(iii) the expression "special category States" shall mean the States as specified in sub-clause (g) of clause (4) of article 279A of the Constitution ³[except the State of Jammu and Kashmir] ⁴[and States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.]