Apr 8 2009

Income Tax for Agricultural Income

Introduction

agriculture-loans-tax-benefitsIn this article I will be writing about the tax implications on the agricultural income. First of all you need not pay the tax for any agriculture income. When you have other sources of income, agriculture income will be clubbed to the total income and give you higher rate for the income tax. If you are not understanding the previous line, don’t worry this article intend to teach you how to calculate the income tax when you are have agricultural income and other sources of income with good examples. It is going to be the simple and straight forward. Enjoy reading this article!!!

Capital Gains on selling Agricultural Land

Tax Calculation For Agriculture Income

  1. If you have only agricultural income, then the income is not taxable. It is fully exempt. For example your total agricultural income is Rs.340000 per year and there is no other source of income. In this case you are not required to pay any tax and file the tax returns.
  2. If you have agricultural income and other sources of income, then you are required to file the returns and show the agricultural income. Even if the total income is below the taxable income.
  3. For example your agricultural income is Rs.100000 and the income from other sources is Rs.50000. The total income is Rs.150000. For the above scenario you need to file the returns and show the agriculture income.

Example for Agricultural Income Tax Calculation

Without Agricultural Income

Description Amount
Other sources of Income 300000
Agricultural Income 000000
Total Income
300000
(-)Deductions under IT 000000
Net Taxable Income 300000
(+)Tax @ 0% On TAX FREE Amt Rs. 150,000 000000
(+)Tax @10%: 1.5 to 3.0 lakhs on Rs. 150,000 015000
(+)Tax @20%: 3.0 to 5.0 lakhs on Rs. 000,000 000000
(+)Tax @30%: On > 5.0 Lakhs on Rs. 000,000 000000
Tax Payable on Net Income 015000
(-): Rebate on Agri. Income 000000 000000
TAX Payable after Ag.income rebate 015000
(+) Short term Capital Gains (STCG) Tax-Shares/ MF @15% on 000,000 000000
(+) Long Term Capital Gains (LTCG) Tax on Property @20% on 000,000 000000
Total Tax (Regular + Capi.Gains) 015000
(+) Edu. cess @ 3% on tax Rs. 15000 000450
Net Total Tax Payable. 015400

With Agricultural Income

Description Amount
Other sources of Income 300000
Agricultural Income 100000
Total Income
400000
(-)Deductions under IT 000000
Net Taxable Income 400000
(+)Tax @ 0% On TAX FREE Amt Rs. 150,000 000000
(+)Tax @10%: 1.5 to 3.0 lakhs on Rs. 150,000 015000
(+)Tax @20%: 3.0 to 5.0 lakhs on Rs. 100,000 020000
(+)Tax @30%: On > 5.0 Lakhs on Rs. 000,000 000000
Tax Payable on Net Income 035000
(-): Rebate on Agri. Income on rs.100000 at 10% 010000
TAX Payable after Ag.income rebate 025000
(+) Short term Capital Gains (STCG) Tax-Shares/ MF @15% on 000,000 000000
(+) Long Term Capital Gains (LTCG) Tax on Property @20% on 000,000 000000
Total Tax (Regular + Capi.Gains) 025000
(+) Edu. cess @ 3% on tax Rs. 15000 000750
Net Total Tax Payable. 025750

If you look into the second table with agriculture income, there is no tax for agriculture income. But, it gets the rebate at lower rate when other sources of income get the tax rate at the higher tax rate. In this way agriculture income can make the difference in your tax rates. I hope you can understand the calculating the agricultural income tax.

Summary

In this article I have explained the basic tax calculation for the agricultural income. There is not many complex things involved in the agricultural income. Because the income is non-taxable and the calculation comes into picture only when there is non-agricultural income. Thank you for reading this article!!!

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Related posts:

  1. Capital Gains on Agricultural Land
  2. Factors needs to consider for computing taxable income
  3. Should I pay taxes for capital gains?
  4. Capital Loss and Tax Calculation
  5. Income Tax Exemption on Donations (NGO) under Section 80g

26 Comments on this post

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  1. Narendra said:

    Hi,
    I have one question for Agricultral loss. Can I show Agriculture loss in my assesement if I am having other source of Income. Waiting for your reply. Thanks in advance.

    June 2nd, 2009 at 6:40 am
  2. krishnas said:

    HI Narendra,

    Thank you for the comments.

    If you gain any thing from Agriculture, then your tax slab will be increased and taxed. If there is a loss, you have to just forget the loss and you will not be allowed to set it off in your total income or it cannot be carry forward for the sake of set off in future years from Agricultural Income.

    If you have any doubts please reply to this comment.

    Thanks,
    Krishna

    June 2nd, 2009 at 8:20 am
  3. Prashant said:

    Dear Krishnas,
    thnx for the valuable information regarding calculation of agriculture income tax. Like me, many people may be thinking to show the agriculture income in AY 09-10 along with salary income. But since the rebate is provided partially, we may not show the same. it is clear that only agriculture income is non taxable…agri income + other income comes under taxation.
    thnx a lot,
    prashant

    July 17th, 2009 at 10:18 pm
  4. krishnas said:

    HI Prashant,

    Thank you for the comments.

    Thanks,
    Krishna

    July 19th, 2009 at 7:48 pm
  5. indejit singh said:

    I am a retd.PSEB Engineer,having pension and agricultural income. The examples given by you are very useful.I request you to add an example for pension less than taxable range say Rs 220000 [Sr.citizen] and agr.income Rs 150000 .

    July 24 ,11.50AM

    July 23rd, 2009 at 11:19 pm
  6. krishnas said:

    HI Indejit,

    There won’t be any difference. You need not pay any tax. If your income is above the tax slab then only you can add the agriculture income. In your case its Rs.220000. Its below tax slab.

    Thanks,
    Krishna

    July 24th, 2009 at 3:47 am
  7. rameshchandra said:

    i want to know how much is greater limit in agriculture income

    July 28th, 2009 at 6:14 am
  8. krishnas said:

    HI Ramesh,

    There is no limit for the agriculture income.

    Thanks,
    Krishna

    July 30th, 2009 at 2:57 am
  9. s.palanichamy said:

    It is better if there is more details regarding rate of rebate on agree income (ie) how much the rate of rebate and whether the 10% of rebate is constant

    July 30th, 2009 at 9:15 pm
  10. krishnas said:

    HI palanichamy ,

    There is no tax for the agri income. If you have other income then agri income will be added to that tax slab.

    Thanks,
    Krishna

    July 30th, 2009 at 9:34 pm
  11. s.palanichamy said:

    please see the reply of mr.Krishna. you are right that agriculture income is not taxable.This is O.K when there is no other income except agri income.The question of rebate comes when the individual is also has some other income besides agri income (ex) agri + salary income or agri + capital gains.I hope my doubt is understood correctly.

    July 31st, 2009 at 9:00 am
  12. krishnas said:

    Yes..the 10% rate is the fixed one.

    July 31st, 2009 at 10:15 pm
  13. Manish Kothary said:

    A great example to explain how marginal the rebate on agri income is ( if combined with other income). thanks for that.
    Now, if i have a Pvt Ltd company under which i get agri income ..is that taxable. If not, it seems to make sense to have this pvt ltd company. Any reasons why one should not have one.

    thanks again for your help
    manish

    September 20th, 2009 at 6:49 am
  14. Ram said:

    Dear Sir,

    My agricultureturn over is 80,00000/- and income from the same agriculture is 11,50000/- & Income other source is 70,000/- ,

    Questions:-

    1. Whether i have to get my A/c Audited.
    2. I have not maintaned proper books of Accounts.
    3. What are the Tax Implication & Penaltyon the same.

    Plz solve my problem and send my email address ASAP.

    Regards & Thanks!!

    Ram

    December 4th, 2009 at 7:56 am
  15. satish said:

    i want to file IT first time how to pay from 2006-2009 i have agriculture income and other income also for other income no document i hv pl help me

    December 9th, 2009 at 12:50 am
  16. raj singh said:

    please let me know if i form pvt ltd company for agricultural activity does this will also be a tax free income as there is no other source of income of my and pvt ltd company

    December 10th, 2009 at 6:20 pm
  17. Sukhwinder Singh said:

    Dear Sir
    You have provided very useful information, i have 2 queries :
    I am a Center Govt PSU employee, can have agricultural income? i have no land on my name, land is on my father’s name, should we sell crop on my name and have agricultural income ? o should i stay away from this.
    Thanx & Regards

    January 30th, 2010 at 3:19 am
  18. prem singh gahlyan said:

    Dear Sir,
    I have Form J or receipts of agricultural product sale but donot have expenditure incurred receipts on the agricultural product. what will be my agricultural income which is to be shown in my ITR.

    February 17th, 2010 at 3:22 am
  19. prabhakar said:

    hi, as according to u, agriculture income in india is exempt from tax. bt, can u explain the taxability if agriculture income is derived from outside india or from abroad ?

    February 25th, 2010 at 9:07 pm
  20. sunil dugar said:

    if i sold a land of my private ltd company aafter 5 year , how can i save income tax on my long term capital gain

    March 28th, 2010 at 10:32 am
  21. Arun Chakraborty said:

    Dear Sir,

    Thank you for the valuable information regarding calculation of agriculture income provided by u..
    I want to know about the slab of:
    income tax(-): Rebate on Agriculture. Does it differ on the increase of Agricultural income or it is fixed for 10% for all agricultural Income.

    waiting for ur reply.
    Thanking u
    arun chakraborty

    April 9th, 2010 at 3:53 am
  22. Arun Chakraborty said:

    Dear Sir,

    Thank you for the Agricultural Calculation..
    I want to know about the slab of:
    income tax(-): Rebate on Agriculture. Does it differ on the increase of Agricultural income or it is fixed for 10% for all agricultural Income.

    waiting for ur reply.
    Thanking u
    arun chakraborty

    April 9th, 2010 at 3:55 am
  23. SHRIPAD said:

    PLE PROVIDE U/S FOR AGRI INCOME DEDUCTION 10%
    ALSO TELL ABOUT % SLAB FOR DEDUCTION FOR AGRI INCOME

    May 15th, 2010 at 6:30 am
  24. Hiren Paun said:

    Dear Sir,

    How much Agriculture income is tax free i hear that about 500000/- income is tax free so pls tell me how much agriculture income is tax free

    Thanking you.
    hiren paun

    May 25th, 2010 at 5:56 am
  25. amrut said:

    Dear sir,

    when the agriculture income + other sources income is taxed(if falls above slab) then it seems that the agri income is indirectly taxed.
    waiting for u r reply.
    thank u…..

    August 27th, 2010 at 12:16 am
  26. Tojesh said:

    Sir WHat is the importace of FOrm J for agriculture produce ,How to get it? WHo issue it .how it look like ?How it is related to Agriculture income?

    August 27th, 2010 at 6:47 am

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