Grow Your Portfolio Tax-Free! All You Need to Know About Agri-Investing

Agri-investment is becoming more and more prominent in the world of investments. Through agri-inesting platforms, regular investors can invest in the agriculture industry and perhaps earn tax-free returns. It's important to be aware of the risks as well as the possible benefits before diving blindly into this rich industry.

The Allure of Agri-Investment

Due to unpredictable weather patterns, seasonal variations, and uncertain harvests, India has never imposed taxes on agricultural income. In reaction to this realisation, agri-investment platforms were established, allowing normal investors to participate in agricultural enterprises and earn tax-free profits. These are some og the platforms through which you can invest - Kisaan Parivar, KrishiFunds, Farm Chakra, Growpital, and FAAB Invest.

These platforms frequently use a paradigm of fractional ownership. This implies that you may begin with a little investment of ₹5,000 and work your way up to ₹15 lakhs. This adds diversity to your portfolio in addition to democratising investing choices. Agri-investment is also a very alluring concept due to the potential for returns that frequently surpass those of standard choices.

Investing on these sites is a breeze. Just go to their website or download their mobile app, then complete the online form. It may be necessary for you to execute a Limited Liability Partnership (LLP) agreement and carry out certain authentication procedures. The money that has been raised from a variety of investors is then combined and used to finance or lease land for agricultural purposes.

Costs for wages, rent, and raw materials are subtracted once the output is sold and money is received. The investors then get their share of the remaining earnings. Generally, you will get fixed returns as specified in the initial LLP agreement you signed.

Understanding the Risks of Agri-Investment

Despite the fact that agri-investment may appear simple, there are obstacles to be aware of. First off, financial success is not guaranteed. As a partner, you bear some of the loss even in the absence of fixed return guarantees. Moreover, nature can be rather harsh. Crop destruction caused by unfavourable weather increases the likelihood that your investment will not provide a profit.

Another cause for worry is the lack of regulation by the Securities and Exchange Board of India and the Reserve Bank of India. This suggests that no organisation is in charge of keeping an eye on or regulating the activities of these platforms. SEBI recently banned Growpital, a well-known agri-investment platform, from accepting funds from investors.

Pros and Cons of Agri-Investment

Pros:

• Portfolio diversification: Investing in a variety of industries, including agricultural, lowers total risk.
• Tax-Free Income: The returns from these schemes are also tax-free because agricultural income is not subject to taxes.
• Predetermined Returns: To provide some certainty, a lot of platforms offer Predetermined returns that are outlined in the contract.

Cons:

• Regulation Uncertainty: At the moment, these platforms function in a grey area without direct SEBI or RBI supervision.
• Dependency on Weather: The weather has a big impact on agriculture. Crop production may be greatly impacted by erratic weather patterns even with modern technologies.
• Liquidity Risk: Although platforms may guarantee speedy redemption processes, agricultural products are gathered according to a seasonal schedule. As a result, you might not be able to access your cash until the following harvest period.

Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)