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Rule 6DD(e): Only Direct Payments to Cultivators Exempt
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ITATtax

Rule 6DD(e): Only Direct Payments to Cultivators Exempt

October 25, 2026

ITAT rules that Rule 6DD(e) exemption applies only to direct payments to cultivators, not those made indirectly through agents.

ITAT Narrows Rule 6DD(e) Exemption Scope

The Income Tax Appellate Tribunal held that the exemption under Rule 6DD(e) of the Income Tax Rules, which covers payments to cultivators, growers, or producers, applies only when payments are made directly to them. Payments made indirectly through intermediaries or agents do not qualify.

The Tribunal observed that the objective of the rule is to ensure that deductions are available only where benefits reach the actual producers. Where an agent collects payments and disburses them later, the assessee fails to meet the documentary and procedural requirements for claiming deductions.

"The rule mandates direct payment, verifiable by name, address, and PAN or Aadhaar of the cultivator."

Practitioners should advise clients to maintain strict compliance with payment protocols when sourcing agricultural products. Indirect payments should not be presumed eligible for deduction under this rule.

Citations

  • Rule 6DD(e), Income Tax Rules, 1962
Practice Areas:tax

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