The document defines key terms related to agricultural income under the Income Tax Act of India. It provides that agricultural income is fully exempt from tax and defines it as income derived from agricultural land in India or farm buildings used for agriculture. It also discusses partial integration of agricultural income for tax purposes when certain thresholds are crossed. The summary discusses the treatment of income from agricultural operations, rent from agricultural land, and income mixed between agricultural and non-agricultural activities.
A comprehensive and detailed analysis of agricultural income and taxation of the same. The article encompasses professional income, capital gains and method of computation of tax. Landmark case laws have also been included.
What is Agricultural Income ?
Section 2 (1A) of the Income tax Act,1961
Agricultural income means :
Revenue generated through rent or lease of a land in India that is used for agricultural purposes ;
Any income derived from commercial sale of produce gained from an agricultural land
Any income from farm building.
Key points to validly classify an income as “agricultural income”
Income should be from an existent piece of land in India ;
Income should be from a piece of land that is used for agricultural operations ;
Income should stem from produce achieved after cultivation of the land. Cultivation of land is a must ;
Income can be from a land that is not under the assessee’s ownership. i.e. ownership of Land is not essential.
Meaning of agricultural Income, Examples, Non Agricultural Income , Is Agricultural Income taxable? Case study, Examples of Agricultural Income and Non-Agricultural Income
A comprehensive and detailed analysis of agricultural income and taxation of the same. The article encompasses professional income, capital gains and method of computation of tax. Landmark case laws have also been included.
What is Agricultural Income ?
Section 2 (1A) of the Income tax Act,1961
Agricultural income means :
Revenue generated through rent or lease of a land in India that is used for agricultural purposes ;
Any income derived from commercial sale of produce gained from an agricultural land
Any income from farm building.
Key points to validly classify an income as “agricultural income”
Income should be from an existent piece of land in India ;
Income should be from a piece of land that is used for agricultural operations ;
Income should stem from produce achieved after cultivation of the land. Cultivation of land is a must ;
Income can be from a land that is not under the assessee’s ownership. i.e. ownership of Land is not essential.
Meaning of agricultural Income, Examples, Non Agricultural Income , Is Agricultural Income taxable? Case study, Examples of Agricultural Income and Non-Agricultural Income
Agricultural income - Relevant Income Tax IssuesAmitoz Singh
This presentation helps in understanding the meaning of Agriculture Income, its taxability, various issues pertaining to the understanding of agriculture and what will qualify as agriculture income. When the said income will be exempt ?
This Project explains the Partial Integration of both Agricultural and Non-Agricultural Income according to the Income Tax Act, 1961.
Contributed by Yash Sakhuja, Harshit Kapoor, Manuj Kotnala and Kabir Seth of Kirori Mal College, University of Delhi
Under the guidance of our professor D.R. Sameer Lama, Commerce Faculty, Kirori Mal College, University of Delhi.
Published on: 19th October, 2020.
Helps the student to know about the Agricultural Income in Indian Income tax Act 1961 and also how the Tax Liability will be calculated when an Assessee have both Agricultural and Non Agricultural Income
Pleased to share the third edition of "Income Tax Compliances Handbook" wherein our Tax team has summarized the important compliance related provisions of Income Tax Act 1961 as applicable to FY 2022-2023 (AY 2023-2024)
Kisan Credit Card | किसान क्रेडिट कार्ड | KCC Scheme and Loan Limit AssessmentAbinash Mandilwar
Kisan Credit Card Scheme as per RBI latest guidelines. Complete scheme norms and loan limit assessment for bankers and farmers. Important for JAIIB / CAIIB exam and Bank PO exam (Banking Awareness). Please like and share the video and subscribe my channel for more banking awareness video. For details you may study my book on JAIIB.
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
Agricultural income - Relevant Income Tax IssuesAmitoz Singh
This presentation helps in understanding the meaning of Agriculture Income, its taxability, various issues pertaining to the understanding of agriculture and what will qualify as agriculture income. When the said income will be exempt ?
This Project explains the Partial Integration of both Agricultural and Non-Agricultural Income according to the Income Tax Act, 1961.
Contributed by Yash Sakhuja, Harshit Kapoor, Manuj Kotnala and Kabir Seth of Kirori Mal College, University of Delhi
Under the guidance of our professor D.R. Sameer Lama, Commerce Faculty, Kirori Mal College, University of Delhi.
Published on: 19th October, 2020.
Helps the student to know about the Agricultural Income in Indian Income tax Act 1961 and also how the Tax Liability will be calculated when an Assessee have both Agricultural and Non Agricultural Income
Pleased to share the third edition of "Income Tax Compliances Handbook" wherein our Tax team has summarized the important compliance related provisions of Income Tax Act 1961 as applicable to FY 2022-2023 (AY 2023-2024)
Kisan Credit Card | किसान क्रेडिट कार्ड | KCC Scheme and Loan Limit AssessmentAbinash Mandilwar
Kisan Credit Card Scheme as per RBI latest guidelines. Complete scheme norms and loan limit assessment for bankers and farmers. Important for JAIIB / CAIIB exam and Bank PO exam (Banking Awareness). Please like and share the video and subscribe my channel for more banking awareness video. For details you may study my book on JAIIB.
In 2020, the Ministry of Home Affairs established a committee led by Prof. (Dr.) Ranbir Singh, former Vice Chancellor of National Law University (NLU), Delhi. This committee was tasked with reviewing the three codes of criminal law. The primary objective of the committee was to propose comprehensive reforms to the country’s criminal laws in a manner that is both principled and effective.
The committee’s focus was on ensuring the safety and security of individuals, communities, and the nation as a whole. Throughout its deliberations, the committee aimed to uphold constitutional values such as justice, dignity, and the intrinsic value of each individual. Their goal was to recommend amendments to the criminal laws that align with these values and priorities.
Subsequently, in February, the committee successfully submitted its recommendations regarding amendments to the criminal law. These recommendations are intended to serve as a foundation for enhancing the current legal framework, promoting safety and security, and upholding the constitutional principles of justice, dignity, and the inherent worth of every individual.
ALL EYES ON RAFAH BUT WHY Explain more.pdf46adnanshahzad
All eyes on Rafah: But why?. The Rafah border crossing, a crucial point between Egypt and the Gaza Strip, often finds itself at the center of global attention. As we explore the significance of Rafah, we’ll uncover why all eyes are on Rafah and the complexities surrounding this pivotal region.
INTRODUCTION
What makes Rafah so significant that it captures global attention? The phrase ‘All eyes are on Rafah’ resonates not just with those in the region but with people worldwide who recognize its strategic, humanitarian, and political importance. In this guide, we will delve into the factors that make Rafah a focal point for international interest, examining its historical context, humanitarian challenges, and political dimensions.
How to Obtain Permanent Residency in the NetherlandsBridgeWest.eu
You can rely on our assistance if you are ready to apply for permanent residency. Find out more at: https://immigration-netherlands.com/obtain-a-permanent-residence-permit-in-the-netherlands/.
Car Accident Injury Do I Have a Case....Knowyourright
Every year, thousands of Minnesotans are injured in car accidents. These injuries can be severe – even life-changing. Under Minnesota law, you can pursue compensation through a personal injury lawsuit.
Responsibilities of the office bearers while registering multi-state cooperat...Finlaw Consultancy Pvt Ltd
Introduction-
The process of register multi-state cooperative society in India is governed by the Multi-State Co-operative Societies Act, 2002. This process requires the office bearers to undertake several crucial responsibilities to ensure compliance with legal and regulatory frameworks. The key office bearers typically include the President, Secretary, and Treasurer, along with other elected members of the managing committee. Their responsibilities encompass administrative, legal, and financial duties essential for the successful registration and operation of the society.
A "File Trademark" is a legal term referring to the registration of a unique symbol, logo, or name used to identify and distinguish products or services. This process provides legal protection, granting exclusive rights to the trademark owner, and helps prevent unauthorized use by competitors.
Visit Now: https://www.tumblr.com/trademark-quick/751620857551634432/ensure-legal-protection-file-your-trademark-with?source=share
Synopsis On Annual General Meeting/Extra Ordinary General Meeting With Ordinary And Special Businesses And Ordinary And Special Resolutions with Companies (Postal Ballot) Regulations, 2018
Military Commissions details LtCol Thomas Jasper as Detailed Defense CounselThomas (Tom) Jasper
Military Commissions Trial Judiciary, Guantanamo Bay, Cuba. Notice of the Chief Defense Counsel's detailing of LtCol Thomas F. Jasper, Jr. USMC, as Detailed Defense Counsel for Abd Al Hadi Al-Iraqi on 6 August 2014 in the case of United States v. Hadi al Iraqi (10026)
Military Commissions details LtCol Thomas Jasper as Detailed Defense Counsel
NMC AGRI.pdf
1. India [Section 2(25A)]
The term 'India' means –
➢ the territory of India as per Article 1 of the Constitution,
➢ its territorial waters, seabed and subsoil underlying such waters,
➢ continental shelf,
➢ exclusive economic zone or
➢ any other specified maritime zone and the air space above its territory and territorial
waters.
Specified maritime zone means the maritime zone as referred to in the Territorial Waters,
Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976.
2. AGRICULTURAL INCOME
AGRICULTURE INCOME - Exempt u/s Section 10(1):
Section 10(1) provides that agricultural income is not to be included in the total
income of the assessee.
Definition of agricultural income [Section 2(1A)]:
This definition is very wide and covers the income of not only the cultivators but also the
land holders who might have rented out the lands. Agricultural income may be received
in cash or in kind.
The term agriculture income is defined in three parts under Income Tax Act u/s
2(1A)(a),(b),(c)
Income from leasing out agricultural land
Income from agricultural operations
3. Agricultural income may arise in any one of the following three ways:-
(1) It may be rent or revenue derived from land situated in India and used for
agricultural purposes. (either in cash or kind/ Assessee may be owner or tenant of
such land).
(However if any interest is recovered for late payment of rent then such interest
would be taxable u/h….??Other sources)
(2) It may be income derived from such land by
(a) Agriculture (eg Wheat produced, Cotton produced etc) or
(b) the performance of a process ordinarily employed by a cultivator or receiver of
rent in kind to render the produce fit to be taken to the market (Eg process
involved to remove rice from paddy etc) ie thrashing, cleaning, drying, crushing
etc or
(c) the sale, by a cultivator or receiver of rent in kind, of such agricultural produce
raised or received by him, in respect of which no process has been performed other
than a process of the nature mentioned in point (b) above.
(3) It may be derived from any Farm Building required for agricultural operations.
4. Let Us understand the above:
(1) Rent or revenue derived from land situated in India and used for agricultural
purposes:
The following three conditions must be satisfied for income to be treated as agricultural
income:
(a) Rent or revenue should be derived from land;
(b) land has to be situated in India (If agricultural land is situated in a foreign country,
the entire income would be taxable); and
(c) land should be used for agricultural purposes.
Note: ‘’Revenue” is much broader than rent. It includes income other than rent.
▪ Rent = Amount received in money or in kind, by one person from another for right to
use land.
▪ It can be received by the owner of the Land or the original tenant from the sub-
tenant(ownership of land is not necessary)
5. (2) Income derived from such land by
(a) Agriculture
• The term “Agriculture” has not been defined in the Act.
• However, cultivation of a field involving human skill and labour on the land can be broadly
termed as agriculture.
• “Agriculture” means tilling of the land, sowing of the seeds and similar operations.
• It involves basic operations and subsequent operations.
Basic operations = Operations by agriculturists which are absolutely
necessary for the purpose of effectively raising produce from the land.
Eg: Ploughing of land, sowing of seeds
Subsequent operations = Operations performed after the produce sprouts
from the land eg weeding, digging the soil around the growth, watering of the
plants at regular intervals, using pesticides and insecticides to protect the crop
etc
• Basic operation = Agricultural Income.
• Basic + Subsequent operations = Agricultural income.
• Only Subsequent Operation = Non-Agriculture income.
6. Non-agricultural income
Income from breeding of livestock.
Income from poultry farming.
Income from fisheries.
Income from dairy farming.
Any Income derived from any building would be agriculture income provided all the
following conditions are satisfied sec2(1A)(c):
(a) The building should be on or in the immediate vicinity of the agriculture land;
(b) It is occupied by the cultivator or receiver of rent or revenue
(c) It is used as a dwelling house or as a store house or other out house
In addition to the above condition any one of the following two conditions should also be
satisfied
i. The Land is assessed to land revenue/Local rate or
ii. It is situated in rural area.
7. Income derived from farm building required for agricultural operations:
ONLY IF IT IS:
• Situated in a rural area.
• In immediate vicinity of the land
• Used as store or dwelling house or other outing building(out house)
IN CONNECTION with such land by the cultivator or receiver of rent or revenue
What is a Rural area?
Ans : Land is subjected to a local rate or Land revenue
➢ If Yes: It is a rural Land
➢ If No: Whether land is situated in a specified area? Yes : It will be an Urban Land/Non-Rural area
SPECIFIED AREA for this purpose shall mean:
✓ Within the jurisdiction of a municipality/Cantonment board with a population of at least 10,000. or
✓ Within 2km from the local limits of the M/CB having a population of > 10,000 up to 1 Lac.
✓ Within 6km from the local limits of the M/CB having a population of > 1,00,000 up to 10 Lacs.
✓ Within 8 km from the local limits of the M/CB having a population of > 10 Lacs.
8. INCOME WHICH IS PARTIALLY AGRICULTURAL AND PARTIALLY NON AGRICULTURAL
(Business)
Rule Business Agriculture % Non-
Agriculture %
7A Manufacture of Rubber 65% 35%
7B(1) Sale of Coffee grown and cured by
seller
75% 25%
7B(1A) Sale of Coffee grown, cured, roasted,
Grounded by seller (with or without
chicory)
60% 40%
8 Growing and manufacturing tea in
India
60% 40%
9. CONCEPT OF TAXATION OF THE AGRICULTURE INCOME:
➢ Agriculture Income is totally exempt under the Act,
➢ But shall be included in the total income in case of certain assessee
➢ for the purpose of determining the rate of tax
➢ on the non-agriculture income known as partial integration of taxes.
➢ It is applicable to Individuals, HUF, AOP, BOI and Artificial Juridical Persons
10. Two conditions which need to satisfied for partial integration are:
1. The Net Agricultural Income should exceed Rs 5,000 p.a., AND
2. Non-Agricultural Income should exceed the BASIC EXEMPTION LIMIT (maximum
amount not chargeable to tax).
(i.e. Rs 500,000 for Very Senior Citizen, Rs 3,00,000 for Senior Citizens, Rs 2,50,000 for
all other individuals.)
It may be noted that aggregation provisions do not apply to company, firm, co-operative
society and local authority. The object of aggregating the net agricultural income with
non-agricultural income is to tax the non-agricultural income at higher rates.
11. Tax calculation in such cases is as follows:
Step 1: Add non-agricultural income with net agricultural income. Compute tax on the
aggregate amount.
Step 2: Add net agricultural income and the maximum exemption limit available to the
assessee (i.e.Rs2,50,000 /Rs3,00,000 /Rs500,000). Compute tax on the aggregate amount.
Step 3: Deduct the amount of income tax calculated in step 2 from the income tax
calculated in step 1
i.e. Step 1 – Step 2.
Step 4: The sum so arrived at shall be increased by Health & Education Cess @4%. [Deduct
Rebate u/s 87A before cess if applicable]
SAME STEPS APPLIES IF OPTED FOR SEC 115BAC (Calculate tax as per the rates mentioned
in sec 115BAC)
12. Mr. X, a resident, has provided the following particulars of his income for the P.Y. 2022-23
i. Income from PGBP –Rs 2,80,000
ii. Income from house property –Rs 5,00,000
iii. Agricultural Income –Rs 1,90,000
iv. Expenses incurred for earning above agricultural income -Rs1,20,000
Compute his tax liability assuming his age is 45 years
Solution: Computation of total income of Mr. X for the A.Y. 2022-23
Particulars Amount (Rs)
Income from PGBP 2,80,000
Income from house property 5,00,000
Net agricultural income [Rs1,90,000 – Rs
1,20,000]
Less: Exempt under section 10(1)
70,000
70,000 NIL
Gross Total Income
Less Deduction Chapter VIA
TOTAL INCOME
7,80,000
-
7,80,000
13. Computation of tax liability (age 45 years)
For the purpose of partial integration of taxes, Mr. X has satisfied both the conditions:
1. Net agricultural income exceeds Rs 5,000 p.a., and
2. Non agricultural income exceeds the basic exemption limit of Rs 2,50,000.
His tax liability is computed in the following manner:
Step 1: Rs 7,80,000 + Rs 70,000 = Rs 8,50,000.
Tax on Rs 8,50,000 = Rs 82,500
Step 2: Rs 70,000 + Rs 2,50,000 = Rs 3,20,000.
Tax on Rs 3,20,000 = Rs 3,500 (i.e. 5% of Rs 70,000)
Step 3 : Rs 82,500 – Rs 3,500 = Rs 79,000.
Step 4 : Total tax payable = Rs 79,000 + 4% of Rs 79,000 = Rs 82,160
14. Eg: Mr X aged has the following income
Non Agri income Rs 4.5 lacs
Agriculture income is Rs 1 lacs
Step 1: Tax Calculation on NAI + AI = Rs 4.5 + 1 = 5,50,000 @ slab rates = Rs 22,500
Step 2 Tax on AI + BEL = Rs 1 lac + Rs 2.5 Lac @ slab rates = Rs 5,000
TAX = Rs 17,500
Less Rebate u/s 87A Rs 12,500
Rs 5,000
Add Cess @ 4% Rs 200
Tax Liabilty Rs 5,200
15. Mr. B grows sugarcane and uses the same for the purpose of manufacturing sugar in his
factory. 30% of sugarcane produce is sold for Rs10 lacs, and the cost of cultivation of
such sugarcane is Rs 5 lacs. The cost of cultivation of the balance sugarcane (70%) is Rs
14 lacs and the market value of the same is Rs 22 lacs. After incurring Rs 1.5 lacs in the
manufacturing process on the balance sugarcane, the sugar was sold for Rs 25 lacs.
Compute B’s business income and agricultural income.
Soln:
Sugarcane: 30% sold (Rs 10 Lac – Rs 5 lac ) = Rs 5 L
70% self consumed (Mv – cost of cultivation) ie Rs 22 L – Rs 14 L = Rs 8 L
Agriculture Income Rs 13 L
Sugar Sold: Sale Rs 25 Lac
Less : Sugar cane MV Rs 22 lac
Less : Mfg Expenses Rs 1.5 lac
Business Income Rs 1.5 Lac