Section 80PA: Deduction for Producer Companies

Applicable to: *Farmer Producer Companies (FPCs) registered under Companies Act, 1956/2013*

This section provides 100% tax exemption on profits from specific agricultural activities, empowering farmer collectives.

Key Features (AY 2025-26)

1.   Eligible Activities

✅ Primary Produce Handling:

• Harvesting
• Grading
• Pooling
• Processing
• Marketing of members’ agricultural produce

✅ Support Services:

• Technical consultancy
• Training
• Insurance
• Credit facilities

2.  Deduction Details

• 100% profit exemption
• No upper limit
• Exemption Period:Continuous (no time limit)

3.  Conditions

• Must be registered as Producer Companyunder Part IXA of Companies Act
• Minimum 2/3rd turnovermust come from members’ produce
• Books must be audited

Comparison with Similar Sections

*Note: Section 10(1) applies to individual farmers, not companies

Illustrative Example

Case: FPC with ₹50 lakh profit from member farmers’ mango sales

• Taxable Income Before 80PA:₹50 lakh
• Taxable Income After 80PA:₹0
• Tax Saved (@30%):₹15 lakh

Compliance Requirements

✅ Form 10BB to be filed with ITR

✅ Member-wise transaction records

✅ FSSAI license (if processing food products)

FAQs

Q: Can FPCs claim this for non-farm activities?
A: No, only core agricultural operations qualify.

Q: Is GST applicable to exempt income?
A: Yes, GST and income tax are separate.

Q: Can FPCs distribute tax-free dividends?
A: Yes, but dividends > ₹10 lakh to individuals attract Section 115BBDA tax.

Pro Tips

1. Maintain 2/3rd Member-Rule:Critical for continued eligibility
2. Combine with SFAC Grants:Up to ₹15 lakh matching grants available
3. Use Formate-18:For annual filings with Registrar of Companies

Section 80PA makes Producer Companies powerful vehicles for farmer prosperity. To maximize benefits:

• Focus on member-centric operations
• Document all member transactions
• Leverage other agri-schemes(PMFBY, e-NAM)