I am in touch with many contract farming companies and supermarket giants to sell our produce and also to tie up with them for buy back options. We are open to grow any crop as long as it is exotic or some thing new and challenging. We have large chunk of fertile land.
The question i have here is, since we are four partners in farming, is it necessary to form a company either a partnership firm or a private limited company in order to sell our produce to range of customers, such as companies, middle men, APMCs, Super market chains and directly.
What are the tax implications for the above.
Also, eventually if we plan to have our own cold storage and packaging houses, will the tax structure change or will it be treated as farmer producer company?
Is is possible to form a company to sell the produce to various customers? (i know it is not mandatory and one single person can do it) but I am asking this because there are four people are involved in this business.
As long as you trade is taxable commodities, you need to be registered with commercial tax department i.e VAT of your state for intrastate trading and Central Sales Tax CST for interstate trade.
A individual cannot register with these entities and only registered business can, meaning you need to be either a sole proprietor or partnership or private limited etc.
Each of the constitution types has its own merits and demerits. A visit to CA should help you.
No Problem can Farm a Society / Limited/Pvt. Ltd., companies. But I am of the Doubt that one may not get the benefits i.e. Subsidies Provided by Govts. Before starting make sure about because Govt. benefits plays an Important Role in this aspect.
MANNE.SN,
Vasudha Green Farms,
9133498366.
Dear sir,
have you thought about cooperative society? Then laws are much easier and simpler to follow than corporations.
This is just an opinion.
Regards
Haresh
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from:
MANNE.SN, for Vasudha Green Farms, vasudhagreenfarms@gmail.com,
09133498366.
A group of farmers can form a Producer Company. In fact, this concept was brought to give the benefits every company enjoys to the Farmers. It is a separate legal entity and eligible to avail all government schemes & subsidies. The same in recognized under Companies Act. to form a new producer company you can approach a Company Secretary.
Note: Producer in this case doesn’t mean a film producer.
IMO
Society means hassles down the lane. Once the society grows and member base increases, it would get political since every person would like to contest for elections n take over control of operations. they forget the real purpose of the society n indulge in petty politics.
its always good to form a private limited company. one can run it well and exit out when things are not in favor.
There is an update to my own post, when checked with CA, dealing with a company selling farm produce.
Yes, we can form a company selling farm produce and there is no tax for selling. the whole income is tax exempted for the company. the partners/investors have to take money in the form of salary only. if the dividend shared, then there is 15% tax on the company. usual income tax is applicable for the individuals involved with the company.