Advance Tax is applicable on every self-employed businessperson, professionals, freelancers, wh...
India is an agricultural rich economy. There are many perks and incentives provided to those who make a living through it. In India, the income from agriculture involves income derived from the sources including commercial production of the agricultural from the horticultural land, any building on the agricultural land, and farming land.
Under the Income Tax Act, 1961 the agricultural income is defined as:
The following are some examples of agricultural income:
The following are some example of the non agricultural income
A mentioned above, the agricultural income is exempted from Income tax. However, if an assessee has agricultural income as well as non-agricultural income, such income which is generated through the agricultural activities will be included in the total income for the reason of computation of Income tax on the non-agricultural Income.
This method is also recognized as the partial integration of the agricultural income with non-agricultural income or an indirect method for taxing agricultural income. However, the tax act aims to levy higher taxes on non-agricultural income.
This method is applicable in the following conditions
In simpler terms, the non-agricultural income must be more than the highest amount not chargeable to tax. (As per the Tax Slab)
The following step is to be followed for the calculation of the agricultural Income:
There are some businesses which includes both, the agricultural income as well as non-agricultural income. In these cases, the problem arises in the taxation as to how much part of the business is to be treated as non agricultural and how much to be treated as agricultural. Hence, in India, the income tax act has provided with the % where some of the parts of the business to be treated as agricultural rest non agricultural income.
These businesses include rubber, coffee and tea and further regulated by these percentages:
|Manufacturing and growing tea||60%||40%|
|Manufacturing and growing rubber||65%||35%|
|Manufacturing and growing coffee||75%||25%|
|Manufacturing and growing of coffee roasted, grounded. grown and cured||60%||40%|
The agricultural operations which are conducted out on any land, either rural or urban, the income which is obtained from the sale of the agricultural generate must be treated as agricultural revenue with the exempt from tax.
In any case, where the criterion related to the agricultural land is not met under the section of Income tax, the individual required to carry out a separate tax evaluation. Also, if the total income is below Rs. 5000, then the ITR has to be filled.
In India, agriculture is the biggest job giver and a source of income for the huge rural population. The country is significantly dependent on agriculture to fulfill their basic requirements. The exemption will be provided only for the agricultural income, not for non-agricultural purpose. However, if an assessee has agricultural income as well as non-agricultural income, such income which is earned through the agricultural activities will be included in the total income for the reason of computation of Income-tax on the non agricultural Income.