Income Tax for Agricultural Income

April 8, 2009

Income Tax

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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60 Responses to “Income Tax for Agricultural Income”

  1. ghanshyam sharma Says:

    Iam agricultrual person but i have some savings which i want to deposit in bank and want to gain normal fixed deposit interest PM. so shall i have to pay any tax for my interest amount if yes what is slab for that. please clarify………..?

    Reply

  2. sandeep Says:

    1.Hum kisano ko to bahut fayda hai bhaiya humko na to INCOME TAX dena padta hai or agar koi tax ke liye bolta hai to mein apni income below 150000 Dikhata hun.

    2. Aur hum apni income bhi chupa sakte hai.

    3. Hum logo ko goverment officer se bhi jaada fayda hai.

    4. Goverment officer ko to tax dena he padta hai par hume nahi.

    5. Mera he example lijiye Meri net income agriculture ki more than 1,000,000. “Par mein ek rupees ka bhi income tax nahi deta hun.”

    HAIN NA FAYDA BHAIYO KISAN HONE KA
    “JAI JAWAN JAI KISAN”

    Reply

    • Kisan Says:

      Mai Kisan hoon, Mujhe tax dene mein koi harj nahi, lekin government mujhe poori azaadi dena chahiye meri fasal bechene ke mamle mein. Agar main international bazaar ke rates pe international customers ko fasal bech pata hoon to mai bhi garv se tax bharne ke liye tayyar hoon. Agar manjoor hai to mai bhi tayyar hoon tax bharne ke liye or desh ki unnati mein bhaagidaar hone ke liye…

      Reply

  3. B.L. Ojha Says:

    Sir,
    My business income is Rs. 250000+300000 from agricultural income
    how many tax will be pay by us also please given computation for the same.

    Regards,

    Reply

  4. Divakar Says:

    Hello,
    I am a doctor with substantial income. I have agricultural income above 5,00,000 per year (from family, as one of the partner). I land up paying almost 20% tax on the agricultural income. whereas my brothers who earn in crore’s dont have to pay any tax. I don’t understand this tax law. can u please explain why it is this way?

    Reply

  5. B D Sharma Says:

    Agriculture land is acquired by govt.and payment received. After some time some award amount announced by the govt.and award amount with interest paid by the govt. Is such award amount and interest on it will be treated at agriculture income. What will be tax treatment of such amount.

    Reply

  6. Renu Says:

    Hi,
    I have a firm which earns revenue from agricultural activities. My drawings from this firm of which I am the proprietor, is deposited in a savings account which is in my personal name. This amount earns me substantial SB interest. How will this SB interest which is earned, be treated from a taxation standpoint?
    I also have some FDs(Fixed Deposits) in my name whose source is agricultural income. How will the interest earned from these FDs, be treated from a taxation standpoint?

    Reply

  7. sanjay Says:

    Hi I am a farmer & want’s to purchase a machine which cost is up to 25 lakh , if i will make downpayment up to Rs 16 lakh,(which is earned from my farm ) & taken bank loan for remaining amount then what about Income tax tell me.

    Reply

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