Understand agriculture income and its taxation in India. Learn about exemptions, reporting, and the Income Tax Act’s Section 10(1) provisions. File your Income Tax Return (ITR) accurately.
Agriculture income refers to the income earned from agricultural activities such as farming, cultivation of crops, and breeding and raising livestock. It includes income earned from the sale of agricultural produce, rent received for agricultural land, income from farm buildings, and income from other agricultural activities.
In general, agricultural income is earned by individuals who are engaged in agricultural activities as their primary source of livelihood. This income can vary depending on factors such as the type of crops grown or livestock raised, the scale of operations, and the market demand for the products.
Agriculture income is a key component of the rural economy in many countries, including India, and is often exempt from income tax to encourage and support agricultural activities. However, it is important to note that the exact definition and treatment of agriculture income may vary depending on the country and its tax laws.
Taxation of Agriculture Income In India
In India, as per the Income Tax Act, 1961, agriculture income is exempt from income tax. This means that if a person earns income solely from agricultural activities, they do not have to pay income tax on that income.
The exemption applies to all types of agricultural income, including income from the sale of agricultural produce, income from farm buildings, and income from the sale of agricultural land. However, it is important to note that if a person earns income from non-agricultural sources, such as rent from a house or interest from a fixed deposit, they will have to pay income tax on that income.
It is also worth noting that while agriculture income is exempt from income tax, it is still taken into account for the purposes of determining the tax rate applicable to a person’s non-agricultural income. In other words, a person’s overall income tax liability is calculated based on their total income, including any exempt agriculture income.
There have been some debates and discussions around the exemption of agriculture income from taxation in India, with some experts suggesting that the exemption should be removed to increase tax revenue and reduce the burden on non-agricultural taxpayers. However, as of now, the exemption remains in place.
Section
Agriculture income is not taxed under any section of the Income Tax Act in India. As per Section 10(1) of the Income Tax Act, 1961, agriculture income is exempt from income tax. This means that if a person earns income solely from agricultural activities, they do not have to pay income tax on that income.
However, it is important to note that if a person earns income from non-agricultural sources, such as rent from a house or interest from a fixed deposit, they will have to pay income tax on that income. Additionally, while agriculture income is exempt from income tax, it is still taken into account for the purposes of determining the tax rate applicable to a person’s non-agricultural income. In other words, a person’s overall income tax liability is calculated based on their total income, including any exempt agriculture income.
Reporting
If you have only agriculture income and your total income is below the minimum taxable limit, then you are not required to file an Income Tax Return (ITR) in India. However, if your total income exceeds the minimum taxable limit (which is currently INR 2.5 lakh for individuals below 60 years of age), then you are required to file an ITR, even if your income consists solely of agriculture income.
While agriculture income is exempt from income tax, it is still required to be reported in your ITR under the head “Agriculture Income”. You need to report your agriculture income in your ITR even if it is below the minimum taxable limit, and you are not required to pay any tax on it.
It is important to note that the ITR forms in India have separate sections for reporting agriculture income and non-agriculture income. You should carefully report your agriculture income in the relevant section of the ITR form and provide all the necessary details, such as the type of crop or livestock, the area of cultivation, and the gross receipts.
In summary, if your total income (including agriculture income) exceeds the minimum taxable limit, you must file an ITR and report your agriculture income in the appropriate section of the ITR form.
Author Bio
How would capital gain of agricultural land, which has been cultivated all along, though located within Municipal limits of a City, be treated in ITR ? Would there be any LTCG tax ? Jai Shree Ram !