Agri income from seeds may be taxed

new delhi: the government is considering amending the definition of “agricultural income’ in the income-tax act by adding a provision to exclude the income of companies, including multinationals, earned only by developing/growing hybrid, particularly terminator, seeds, for commercial sale. the aim is to ensure that the income of such companies does not escape taxation by being classified as ‘agricultural income’. currently, revenue department and several such companies are locked in litigation over this issue with revenue contending that such income cannot be exempted from tax as being ''agricultural income’ and the companies claiming such an exemption. with the entry of a large number of multinationals into the agricultural seeds business in the country this issue has become extremely important and would also be a small but significant step towards taxing what is currently under ‘agri cultural income’. there are several multinational companies which, through research are developing hybrid seeds and terminator seeds, and multiplying these for commercial sale to farmers. several such multinational companies are claiming exemption of their profits earned from selling such seeds to farmers as part of agricultural income and therefore exempt from tax. the companies argue that their seeds are also produced through farming, although in controlled conditions, and these are being sold commercially just the way a farmer would sell his produce. the revenue department is however emphasising the research aspect of the companies operations, say sources. many companies like clause seeds, proagro seed company, gangagen biotechs, wockhardt, nath seeds are either in the process of launching or expanding seeds businesses.