If Paddy is converted into rice by farmers it is exempted but if it is converted into rice by rice mill it is taxable Is that right? Under Income tax Act.
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Quick Summary
This discussion explores the tax treatment of income derived from converting paddy into rice. Generally, if farmers process paddy into rice through ordinary means, it's considered agricultural income and may be exempt. However, if a rice mill undertakes the conversion, the income is typically taxable. The key distinction lies in who performs the processing and whether it changes the fundamental character of the agricultural produce.
For making Agriculture Produce saleable in the market involves ordinary process to be done by cultivator which does not change the original character of Agri Produce.. So in my view it should be Agricultural income