Tea, Coffee and Rubber Development Account: Section 33AB and Current Section 48 Explained

The tax deduction for qualifying deposits made by businesses that grow and manufacture tea, coffee or rubber in India continues under the current income-tax law. The numbering has changed: the former Section 33AB of the Income-tax Act, 1961 is now substantially carried into Section 48 read with Schedule IX of the Income-tax Act, 2025.

What is the tea, coffee and rubber development account deduction?

The provision encourages eligible plantation businesses to set aside funds for purposes permitted under approved development schemes. An assessee carrying on the business of both growing and manufacturing tea, coffee or rubber in India can claim a deduction when the required amount is deposited in the prescribed special account or deposit account within the statutory time limit and the other conditions are satisfied.

Current law: Section 48 and Schedule IX of the Income-tax Act, 2025

Section 48 provides the framework for the deduction and directs the computation, withdrawal and asset-transfer rules to Schedule IX. Schedule IX contains the detailed conditions that were earlier found within Section 33AB itself.

1. Amount of deduction

The deduction is the lower of:

• the amount or aggregate amount deposited in the qualifying specified account; or
• 40 percent of the profits of the eligible tea, coffee or rubber business, computed under the head "Profits and gains of business or profession" before allowing this deduction.

The deduction is allowed before setting off eligible losses brought forward from earlier tax years.

2. Deposit in a specified account

The deposit must be made before the expiry of six months from the end of the tax year or before the due date for furnishing the return of income, whichever is earlier. The specified account may be:

• a special account maintained with the National Bank for Agriculture and Rural Development (NABARD) in accordance with an approved special scheme; or
• a deposit account opened in accordance with a deposit scheme made by the Tea Board, Coffee Board or Rubber Board with the prior approval of the Central Government.

3. Audit requirement

The accounts of the eligible business must be audited by an accountant before the statutory specified date, and the prescribed audit report must be furnished by that date. Under the Income-tax Rules, 2026, the corresponding audit compliance is prescribed for the current provision. Taxpayers should use the form and filing requirements applicable to the relevant tax year on the official Income Tax portal.

4. No double deduction

Once a deduction has been allowed for an amount deposited in a specified account, the same amount cannot be claimed again in another tax year. Where the assessee is a firm, association of persons or body of individuals, the deduction is not separately available in computing the income of its partners or members.

Withdrawal and use of money from the account

Money standing to the credit of the specified account is ordinarily withdrawable only for purposes permitted by the applicable scheme. Schedule IX also recognises specified circumstances such as closure of business, death of an assessee, partition of a Hindu undivided family, dissolution of a firm and liquidation of a company.

Amounts withdrawn on closure of business or dissolution of a firm are generally treated as business profits of the relevant tax year. Money released or withdrawn for an approved business purpose but not used for that purpose within the tax year is also generally brought to tax, subject to the statutory exceptions.

Assets and expenditure funded from the account

The law prevents a double tax benefit. Expenditure met from an amount withdrawn from the specified account in accordance with the scheme is not again deductible while computing business income.

Schedule IX also restricts the use of withdrawals for specified assets, including certain office or residential plant and machinery, office appliances other than computers, assets whose entire cost is otherwise deductible in one tax year, and specified machinery or plant covered by the statutory schedule. A withdrawal used for such prohibited purposes can be treated as taxable business income.

Sale or transfer of an asset within eight years

If an asset acquired under the special scheme or deposit scheme is sold or transferred before eight years have expired from the end of the tax year in which it was acquired, the portion of its cost attributable to the deduction is generally deemed to be business income in the year of transfer.

Schedule IX provides exceptions for specified transfers, including transfers to Government, a local authority, certain statutory corporations or a Government company, and qualifying succession of a firm by a company where the statutory conditions are met.

Meaning of important terms

Section 33AB under the Income-tax Act, 1961 - key points

Under the former Section 33AB, an assessee carrying on the business of growing and manufacturing tea, coffee or rubber in India could claim a deduction for qualifying deposits made with NABARD or into an approved deposit account. The deduction was limited to the lower of the amount deposited or 40 percent of the profits of the eligible business.

The old section also required audit compliance, restricted withdrawals to scheme purposes and specified circumstances, prevented a second deduction for expenditure funded from the account, and provided for taxation where funds were misapplied or qualifying assets were transferred within the prescribed eight-year period.

Practical checklist before claiming the deduction

1. Confirm that the business both grows and manufactures tea, coffee or rubber in India.
2. Identify the approved special scheme or deposit scheme applicable to the business.
3. Make the qualifying deposit within the earlier of the two statutory deadlines.
4. Compute the 40 percent profit ceiling before claiming the deduction.
5. Complete the prescribed audit and furnish the required report by the applicable due date.
6. Maintain evidence of deposits, withdrawals and utilisation of funds.
7. Track assets purchased from scheme funds for the eight-year transfer restriction.
8. For current tax years, apply Section 48 and Schedule IX of the Income-tax Act, 2025 rather than relying only on the old Section 33AB numbering.