Taxability of Agricultural income 

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. 2019-20, 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. 2019-20, 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. 2019-20.

Agricultural income

Steps to Calculate Tax on Agricultural income

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 82,500/- for an individual who is below the age of 60 Years during the P.Y. 2019-20.
  • 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 72,500/-. Thus, this is the income Tax liability subject to deductions, Education cess etc., as applicable.

(Author Details- CA Sahil Jolly – Jolly & Co. Chartered Accountants, Contact: +91-9999830077, Email : [email protected])

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Republished with Amendments

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43 Comments

  1. Arun says:

    If taxpayer is below 60 year then
    If normal income (example salary ,house propery ,capital gain , business profession ,other source ) = 200000
    Casual income( lottery) = 60000
    Agriculture income = 8000

    In this case agriculture income is more than 5000
    & non agriculture income consider 200000 or 260000
    Because 60000 is casual income also

  2. veeresh says:

    How to calculate tax when agri income is 1crore1lakh and non agri income is 1lakh? question is because here assesse is eligible to take marginal relief and tax on him will be on method of aggregation.. pls answer to this anybody

  3. Bhavesh Savla says:

    Kindly correct me if I am wrong, but in your second step, the tax for PY 2019-20 should be Rs. 5000 and not Rs. 10000. Can you confirm the same?

  4. mounika says:

    While calculating agricultural income -total income of non agricultural considered before deduction or after deductions?

  5. Puja Kumari Shaw says:

    If business income -320000
    Agricultural income -50000
    In this case, is rebate given?
    For rebate , what will we check only business income or business income add agricultural income.
    Please clear it sir

  6. S.Sivakumar says:

    how to calculate the agricultural income under income tax and how to find out the taxable income is there any specified percentage on that?

  7. Tridib sarma says:

    Agri income taken exemption under section 10(1) but
    before i.t.assessment agri income tax not pad. can ITO cancelled the the exemption taken U/s 10(1)

  8. 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.

  9. 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.

  10. 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.

  11. 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.

  12. 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 ?

  13. 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.

  14. 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.

  15. 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 : [email protected]

  16. 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.

  17. 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.

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