June 25, 2012

Is your Agriculture Income really exempted?

When it comes to agricultural income it is commonly believed that it is exempted. But you need to calculate it for finding income tax rate when partial integration of non-agricultural income with agricultural income conditions satisfied. So now let us look what are the conditions and how we can calculate agriculture income for taxation purpose.

The scheme of partial integration of non-agricultural income with agricultural income is applicable if the following three conditions are satisfied.

Condition 1-The taxpayer is an individual, a HUF, a body of individual, an association of persons or an artificial judicial person.

Condition 2-The taxpayer has non-agricultural income exceeding the amount of exemption limit (Current exemption limit is Rs.2,00,000 for tax payers who are below 60 yrs of age).

Condition 3- The agricultural income of the taxpayer exceeds Rs.5,000

If above said three conditions are satisfied then you need to consider your agriculture income too for finding in which slab of income tax rates you fall. I will show you how to do this calculation with simple example.

Mr.X is individual whose age is 45 yrs, his yearly income from his business is Rs.10,00,000 and his agriculture income is Rs.3,00,000. So in this case all the above three conditions are satisfied. Now we need to calculate by combining his agricultural income with non agriculture income to find his tax slab. Below is the Calculation method of Agriculture Income under Partial Integration scheme.

Agri

From the above table you found that eventhough agriculture income is considered as exempted under Section 10 (1) of Income Tax, still it is considered for finding tax payers taxability when the above three conditions are satisfied.

 

28 Comments

  1. Dear Sir,

    I had purchased Agriculture land 4-5 years back, but i have not done any cultivation on that land or use for any agriculture purpose.
    Now i want to sold the land but have following questions.
    1) If i sale land (Non-cultivated) then is it comes under ‘capital gain’? If yes what is the tax rate applicable for this?
    2) Is there any deduction if i purchase any flat or land against the above sold sold property.

    Please reply on this sir…

    Amit

    Reply
      • Thank you for immediate reply.

        But few advocates are saying it will come under Capital gain. so you have to pay tax for the same.

        Reply
  2. I have fixed deposit of more then 2 lake ,I have 4 acres of land its only agriculture income last 2year the problems is income tax department sent letter for income declaration please suggest what can we do

    Reply
    • Rashid-Declare the income as per your actual. What is the problem here?

      Reply
  3. If I have a salary income of 10lakhs per annum & have agricultural land; can I show expenditure of 4 lakhs on agri land with out income & only pay tax for 6 lakhs?

    Reply
  4. This means agi income is taxable. Rebate does not fully compensate the tax levied at higher slabs.

    Reply
  5. Thank You Very Much Mr.Tonagatti. It’s a very good explanation in very simple words.

    Reply
  6. my fathers annual income is 10,00,000 from agriculture. it is the only one source of income. so my question is that… which form i have to fill to submit income tax return?

    Reply
  7. Can I show land on my parents name as my agriculture income as my parents donot file taxes and I can use it for enhancing my loan eligibility.

    Reply
  8. My income from bussiness is 210850 and agriculcher income 45500. i paid 11220 for lic. so i need to paid tax on income or not

    Reply
    • Aman-Please calculate yourself. I don’t know much about your income details.

      Reply
  9. Which ITR form should be used to file returns if incomes are from salary and agriculture

    Thank you.

    Reply
  10. Sir, How we can save more tax on agricultural income which is other than salary?

    Reply
    • YK-The procedure already explained above. If you still have doubts then let me know.

      Reply
  11. My Father Is has Areca nut Planter and he do not have any other source of Income. He is doing Agricultare from last 40 years and His Anual Icome is 2,00,000. We have all supportng Documents to Prove that he is cultivatig. But he has Missed bills of selling Crop of many Years. Whether The money earned by him is Taxable? As he can not Produce Bills( He has Very Few Bills).

    Reply
    • Gurukiran-Whatever may be the missing bills or cultivation, but you mentioned that his overall income is Rs.2,00,000 then he is not obliged to pay any tax under current income tax slabs.

      Reply
  12. step 2 is like this, if i am not wrong: total income is 13 lakhs, hence the tax is rs.130,000+ 30% of the amount by which the total income exceeds 10 lakhs, total tax is 130000+30% of 300000=130000+90000=220000 and not 210000 as shown in the table. hence final tax payable is 220000- rebate 30000=190000 and not 180000 as shown.

    Reply
    • Gsp Rao-You are correct and thanks for finding the error. I updated the same.

      Reply
  13. dear sir how did u get the step 2.)210000.cant we calculate like this=(1300000-1000000)*30%

    Reply
    • Manish-It is tax on total income (Business+Agri) i,e tax on Rs.13,00,000 not on what you mentioned.

      Reply

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