{"id":21095,"date":"2020-12-04T15:30:20","date_gmt":"2020-12-04T10:00:20","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=21095"},"modified":"2020-12-04T16:34:16","modified_gmt":"2020-12-04T11:04:16","slug":"agriculture-income-exemption-from-income-tax","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/agriculture-income-exemption-from-income-tax\/","title":{"rendered":"An Overview on Agriculture Income Exemption from Income Tax"},"content":{"rendered":"\n<p class=\"has-drop-cap\">An income earned, or profit derived from commercial production of agricultural land covered in an agricultural income. Other sources of agricultural income include farming land, and commercial produce from horticulture land. The agriculture income is defined under <strong><em>Section 2(1A)<\/em><\/strong> of Income Tax Act 1961. <strong><em>According to this section, the agriculture income is<\/em><\/strong><\/p>\n\n\n\n<ul><li>The revenue\nor rent generated from the land located in India are used for agricultural\nreasons<\/li><li>Income\nearned from the land by agriculture operations like processing of agricultural\nproducts for making it market-ready and saleable<\/li><li>Income\nderived from seedlings or saplings growing in a nursery<\/li><li>Income\nassignable to a farmhouse, but only if it satisfies specific conditions laid\ndown in section 2(1A)<\/li><\/ul>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/agriculture-income-exemption-from-income-tax\/#Rent_or_Revenue_got_from_Agricultural_Land\" >Rent or Revenue got from Agricultural Land<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/agriculture-income-exemption-from-income-tax\/#Examples_of_the_Agricultural_Income\" >Examples of the Agricultural Income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/agriculture-income-exemption-from-income-tax\/#Examples_of_Non-Agricultural_Income\" >Examples of Non-Agricultural Income<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/agriculture-income-exemption-from-income-tax\/#Agriculture_Income_can_be_Exempted\" >Agriculture Income can be Exempted<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/agriculture-income-exemption-from-income-tax\/#The_Benefit_under_Section_54B\" >The Benefit under Section 54(B)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/agriculture-income-exemption-from-income-tax\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rent_or_Revenue_got_from_Agricultural_Land\"><\/span>Rent or Revenue got from Agricultural Land<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Rent is a consideration for the right to use the land. There\nis a lot of scope of possible sources of income which can be derived from the\nagriculture land. For instance such fees received for renewal of grant of land\non lease. However, revenue generated from land does not include consideration\nreceived the sale of land.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Income Derived from Agricultural Land <\/h3>\n\n\n\n<p>The meaning of agriculture is not covered under the Act.\nHowever it has been laid down by Honble Supreme Court in the matter of <strong><em>CIT\nv. Raja Benoy Kumar Sahas Roy<\/em><\/strong> where the term agriculture has been\nexplained when it consist of two types of operations \u2013<\/p>\n\n\n\n<ul><li>The basic operations will include the\ncultivation of land and consequently tilling of land, planting, sowing of seeds,\nand other such operations that require a human skill and effort directly on the\nland itself.<\/li><li>The subsequent operation includes the operations\nwhich have been carried out for growth and preservation of product such as weeding,\ndigging soil around the crops etc. It also includes the operations that would fit\nfor use in the market like tending, cutting, pruning, harvesting, etc. An\nincome derived from the saplings or seedlings grown in a nursery would also be\nconsidered to be an agricultural income, whether or not the basic operations\nwere carried out on land.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Examples_of_the_Agricultural_Income\"><\/span>Examples of the Agricultural Income<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The some examples of agricultural income are as follows:<\/strong><\/em><\/p>\n\n\n\n<ul><li>Income has derived from sale of replanted trees.<\/li><li>Income has made from the sale of seeds.<\/li><li>Rent received from the agricultural land.<\/li><li>Income from growing of flowers and creepers.<\/li><li>Profits received from a partner a firm engaged\nin the agricultural activities.<\/li><li>Interest on capital which a partner earns from\nthe firm, engaged in agricultural operations.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Examples_of_Non-Agricultural_Income\"><\/span>Examples of Non-Agricultural Income<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The following are some examples of non-agricultural income:<\/strong><\/em><\/p>\n\n\n\n<ul><li>Income received from the poultry farming.<\/li><li>Income received from the bee hiving.<\/li><li>Any dividend which an organization pays from an agriculture income.<\/li><li>Income received from the sale of spontaneously grown trees.<\/li><li>Income received from the dairy farming.<\/li><li>Income received from the salt produced after the land flooded with sea water.<\/li><li>Purchase of the standing crop<\/li><li>Royalty income received from the mines.<\/li><li>Income received from the butter and cheese making.<\/li><li>Receipts from the TV serial shooting in any farm house.<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/types-of-itr-income-tax-returns-online\/\">Types of ITR (Income Tax Returns)<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Agriculture_Income_can_be_Exempted\"><\/span>Agriculture Income can be Exempted <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to <strong><em>Section 10 (1)<\/em><\/strong> of <em><strong>Income Tax Act of 1961<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/The_Income-tax_Act,_1961\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>, an agricultural income under income tax will get an exemption. However, the agriculture income is included for calculating the tax liability if the conditions mentioned below are satisfied cumulatively-<\/p>\n\n\n\n<ul><li>Net agricultural income exceeds from Rs. 5000 for\nthe previous financial year.<\/li><li>Total income, in addition to the net\nagricultural income, exceeds from the basic exemption limit.<\/li><\/ul>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong> The basic limit of the agricultural income exempt from tax is 2, 50,000 for individuals who are below the 60 years of age &amp; Rs. 3,00,000 for individuals who are above the age of 60 years.<\/div>\n\n\n\n<p><strong><em>For those who belong to above income categories, can calculate the tax\nliability by following these steps.<\/em><\/strong><\/p>\n\n\n\n<ul><li>Step 1: Add both agricultural income and other\nincome<\/li><li>Step 2: Add both basic exemption limit and net agricultural\nincome<\/li><li>Step 3: Then subtract the result from Step 1 and\nStep 2 to get the final tax liability.<\/li><\/ul>\n\n\n\n<p>For individuals who have an agricultural income up to Rs 5,000, it is essential to disclose revenue in the <a href=\"https:\/\/corpbiz.io\/income-tax-return-filing\"><strong>income tax return<\/strong><\/a> form. And for those whose income is above Rs 5000, the income disclosure has to be made in ITR 2.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Calculation of Agriculture Income as Shown below<\/h3>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"1024\" height=\"597\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Calculation-of-Agriculture-Income-as-Shown-below-1024x597.png\" alt=\"Calculation of Agriculture Income as Shown below\" class=\"wp-image-21097\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Calculation-of-Agriculture-Income-as-Shown-below-1024x597.png 1024w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Calculation-of-Agriculture-Income-as-Shown-below-300x175.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Calculation-of-Agriculture-Income-as-Shown-below-768x448.png 768w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/12\/Calculation-of-Agriculture-Income-as-Shown-below.png 1200w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><\/figure><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Benefit_under_Section_54B\"><\/span>The Benefit under Section 54(B)<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any individual or HUF can claim tax benefit under section 54\n(B). The benefit is for tax-paying individuals who sell their agricultural land\nin order to buy other agricultural land.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Section 54B of Income Tax Act, 1961<\/h3>\n\n\n\n<p><strong><em>The Section 54B<\/em><\/strong> of Income Tax Act, 1961, provides relief to\ntaxpayers who sell their agricultural land and use the sale to acquire another\nagricultural land will receive the tax benefit under Section 54B of Income Tax\nAct. However, these conditions must satisfy firstly:<\/p>\n\n\n\n<ul><li>The benefit can only be claimed by an individual\nor HUF<\/li><li>The agricultural land has to be used by an\nindividual or parents for agricultural purpose for at <strong><em>least 2 years<\/em><\/strong> immediately\nbefore the date on which an exchange of land occurred. In case of HUF, the land\nhas to be used by any member of HUF. <\/li><li>The taxpayer must purchase another agricultural\nland <strong><em>within\n2 years<\/em><\/strong> from the date of selling the old land. If it is case of an\nincident of compulsory acquisition, then a period of acquiring new agricultural\nland will be assessed from a date of receipt of compensation. It must be known\nthat under <strong><em>Section 10(37),<\/em><\/strong> capital gain must not be chargeable to tax if\nagricultural land which has been compulsorily acquired under any law, and for\nthat the consideration is approved by a central government or a banking\nregulator received on or after 1st Apr 2004.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An agricultural income has been exempted from the income tax. However, the Income-tax Act has laid down the method to indirectly tax such income. The method or concept may be called as the partial integration of agricultural income with non-agricultural income.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/10-reasons-why-filing-income-tax-return-is-vital-for-you\/\">10 Reasons Why Filing Income Tax Return Is Vital For You<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>An income earned, or profit derived from commercial production of agricultural land covered in an agricultural income. Other sources of agricultural income include farming land, and commercial produce from horticulture land. The agriculture income is defined under Section 2(1A) of Income Tax Act 1961. According to this section, the agriculture income is The revenue or [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":21096,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[10],"tags":[1281],"acf":{"service_id":"403"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":12604,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21095"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=21095"}],"version-history":[{"count":9,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21095\/revisions"}],"predecessor-version":[{"id":21108,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/21095\/revisions\/21108"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/21096"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=21095"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=21095"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=21095"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}