Taxability of Agricultural income post amendment by Finance (No.2) Act, 2014

Agricultural income is exempt from Income Tax under section 10(1) of the Income Tax Act, 1961. However, its included, for rate purposes, in computing the Income Tax Liability if following two conditions are cumulatively satisfied:

  1. Net Agricultural income exceeds INR 5,000/- for P.Y. 2014-15, and
  2. Total income, excluding net Agricultural income, exceeds INR 2,50,000/-.

Kindly note that the aforementioned condition at Serial No.2 shall change to INR 3,00,000/- in case if the Assessee is an individual who falls in the age bracket of 60 to 79 Years during the P.Y. 2014-15, and to INR 5,00,000/- in case if the Assessee is an individual who is of the age of 80 Years or more during the P.Y. 2014-15.

Once the aforementioned conditions are satisfied then we shall compute the Tax liability in the following manner:

  • First, include the Agricultural income while computing your income Tax liability. Example – Let us say that an Individual Assessee has a Total income of INR 7,50,000/- (excluding Agricultural income) and a Net Agricultural income of INR 100,000/-. Then, per this step, Tax shall be computed on INR 7,50,000/- + INR 1,00,000/- = INR 8,50,000/-. Thus, income Tax amount as per this step shall be INR 95,000/- for an individual who is below the age of 60 Years during the P.Y. 2014-15.
  • Second, add the applicable basic Tax slab benefit, as applicable, to the Net Agricultural income. Thus, per our example mentioned above we shall add INR 2,50,000/- to INR 1,00,000/- as the applicable Tax slab benefit available to an individual below 60 Years of age is INR 2,50,000/-. Now we will compute income Tax on INR 3,50,000/- (Tax slab benefit 2,50,000 + Net Agricultural income 1,00,000). The amount of Tax shall be INR 10,000/-.
  • Third, subtract the Tax computed in Second step from the Tax computed in First step = INR 85,000/-. Thus, this is the income Tax liability subject to deductions, Education cess etc., as applicable.

The aforementioned treatment of Agricultural income has been illustrated subject to Finance (No.2) Act, 2014.

(Author Details- CA Sahil Jolly – Jolly & Co. Chartered Accountants, Contact: +91-9999830077, Email : casahiljolly@gmail.com)

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25 responses to “How to Calculate Tax on Agricultural income”

  1. Shivanshu says:

    how I calculate tax liability
    Agriculture income re 2500000
    Total income re 350000

  2. Rajkumar Goyal says:

    I have a agricuture land on lease. I pay lease rent and agriculture process on agriculture land through hire persons then what is the procedure of taxation on generate agriculture income.

  3. Rajkumar Goyal says:

    My non agriculture income is Rs. 255000/- but after 80c deduction Rs. 25000/- It is 230000/- and Agriculture income Rs, 500000/- what will be tax position if exemption limit Rs.250000/- ? kindly reply this query.

  4. A says:

    TOTAL INCOME AFTER ALL DEDUCTIONS 3,88,350 AGRICULTURAL INCOME 7,38,080 Age 33 years pls calculate tax

    • Surjit Singh says:

      I have only agriculture income (Net Agriculture income after deducting expenditure is Rs 100000/-. I have annual income of Rs 60000/- under fixed salary. I have sold my Agriculture land located in rural area at Rs. 35 Lakhs and have received 15 Lakh as advance from other piece of rural agriculture land for sale from a party. Should I file IT return even if I donot fall under IT slab. Moreover whether I should file IT return with Capital Gain. Please advice.

  5. A says:

    TOTAL INCOME AFTER ALL DEDUCTIONS 3,88,340 & AGRICULTURAL INCOME 4,79,750 Age 33 yers pls calculate tax

  6. Shubeg Singh Gill says:

    For FY-2015–16 , I have Disability Pension for Rs 6.25 Lakh and Interest Income Rs 60000 from FDs. As per IT laws, Disability Pension is fully exempt from Income Tax. I am a senior citizen. Please calculate my IT liabilities.

  7. Bajrang lal says:

    dear sir,
    I have INR 8,00,000 from salary & INR 2,00,000 from agriculture income .Please caculate incometax for A.Y.2016-17

  8. sajjad safarzadeh says:

    sajjad safarzadeh
    hi;i am sajjad safarzadeh from iran
    Greetings and I hope the good old days you would demand if it is possible this article or methods of doing this and the variables required to send me.My way to download this article or other articles on this site not found.
    Please do guide.

  9. Shankar Warade says:

    Dear Sir,
    Can you please provide the list of deductible expenses for calculating the agriculture income in India?

  10. Aditya says:

    Plz give me the details if the Agri income is 14 lacs and business income is 3.5 lacs then how we will calculate the TAX of AY 2015-16

  11. Gaurav says:

    Dear sir, what happens in case the assessed has 5 lac rs agri income only. In that case do we not calculate the tax or if we do, do we still add the basic exemption limit like in step 2 coz that will bring a tax income ?

  12. Mohit says:

    Sir,

    Can I claim deduction 80c to 80u in step 1?

  13. susanta seth says:

    Sir,
    Please Reply Calculated in Agricultural income.Please Send The Sample Calculation.

  14. Simran says:

    Respected CA Sahil Joly,

    Sir, as per my knowledge and information, Chartered Accountants should not provide their firm name along with their Contact No.and their mail id as it seems like you are trying to solicit clients for which a CA becomes guilty of professional misconduct as per The Chartered Accountants Act.
    Please correct me if I am wrong.

    Thanks.

  15. Manvendra Singh Chauhan says:

    So I deduced that agricultural income slowly increases your tax up to 1 lac (for 10 Lac of agri income)and thereafter the tax difference (between with and without agri income) remains fix at 1 Lac whatever amount the agri income increases.

  16. CA Sahil Jolly says:

    Hi,

    As always its nice to see the comments of the respected personnel.

    Just to clarify, the method of computation of Agricultural Income essentially remains the same. Its just that due to change in the respective Income Tax slabs it becomes necessary to apply the basic deduction accordingly.

    Purpose of this post was mainly to illustrate computation of Tax liability in case if one has Agricultural income as well. However, its just that the latest Income Tax slabs, per Finance (No.) Act 2014 has been deployed to illustrate the same.

    Regards,
    CA Sahil Jolly
    Jolly & Co. Chartered Accountants
    Email : casahiljolly@gmail.com

  17. Naresh says:

    There is no change in Finance (No 2) Act, 2014. The title post amendment Finance(NO 2) Act, projects that there is some change in the provisions and seems misleading.

  18. varsha says:

    very gud post

  19. ca. g. padmanabhan says:

    How is the position different than the existing one? Was there any amendment made in the latest FA? The title “post amendment by FA 2014” is misleading.

  20. Deepak Patil says:

    What is New in that??????

  21. NAVIN SALUJA says:

    what is the password to unprotect the sheet?

  22. CA. M. Lakshmanan says:

    What is new?

  23. sudarshana says:

    Very good post and informative. I just cannot deciper the logic behind such caclulation. Paricularly the deduction part of it.

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