Agricultural income in Indian Income Tax Act 1961

B.SATYANARAYANA RAO ASSO.PROF IN COMMERCE

ST.JOSEPH’S DEGREE & P.G COLLEGE

PPT ONAGRICULTURAL INCOMEIN INDIAN INCOME TAX ACT 1961

AGRICULTURAL INCOMEMEANING: The Income which received

from Agriculture source is called Agricultural Income.

Definition U/S 2(IA)Agricultural Income Is Fully Exempted as per

Income Tax Act 1961 U/S 10(1)

Agricultural Income includes the following

(a).Any Rent or Revenue derived from

Agricultural Land situated in India

(b) Any Income From

(i) Cultivation of Agricultural Land

(ii) a process carried on to make the

produce or rent in kind marketable.

(iii) From sale of Agricultural produce

(c) Income From Agricultural House

Property

TYPES OF AGRICULTURAL INCOME1. RENT OR REVENUE

2. CULTIVATION OF LAND

3. INCOME FROM A PROCESS

4. INCOME FROM SALE OF PRODUCE

5. INCOME FROM LET OUT AGRICULTURAL H OUSE PROPERTY

TESTS TO DETERMINE AGRI INCOME INCOME IS DERIVED FROM LAND

LAND MUST BE USED FOR AGRICULTUR PURPOSE

LAND MUST BE SITUATED IN INDIA

Agricultural Incomes(a)    Income from sale of replanted trees.(b)   Rent received for agricultural land.(c)    Income from growing flowers and creepers.(d)   Share of profit of a partner from a firm

engaged in agricultural operations.(e)    Interest on capital received by a partner from a firm engaged in agricultural operations.(f)    Income derived from sale of seeds.

Non Agricultural Incomes (a)   Income from poultry farming.(b)   Income from bee hiving.(c)    Income from sale of  spontaneously

grown trees.(d)   Income from dairy farming.(e)    Purchase of standing crop.(f)    Dividend paid by a company out of its

agriculture income.

(g)   Income of salt produced by flooding

The land with sea water.(h)   Royalty income from mines.(i)     Income from butter and cheese

making.(j)     Receipts from TV serial shooting in

farm house is not agriculture income.

Integration of Agricultural IncomeMeaning: Clubbing of Agricultural

Income with Non Agricultural Income for the Computation of Tax Liability is known as Integration of Agricultural income.

When to IntegrateIf Agricultural Income exceeds Rs.5000

in the relevant Previous year If Non Agricultural Income Exceeds

Basic Exemption Limits of Rs.2,00,000/2,50,000/5,00,000 in the relevant Previous year

How to IntegrateStep 1 : Add A.I with N.A.I Step 2 : Calculate Tax on the (Step 1) total as per the current Tax Rates

Step 3 : Add A.I with Basic exempted limit

Step 4 : Calculate Tax on the (Step 3) total as per the current Tax Rates

Step 5 : Tax calculated at step 4 is deducted from tax calculated at step 2

Step 6 : Add Education Cess 3% Step 7 : Total is tax payable.

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