How To Add Agricultural Income In Itr

Agriculture is said to exist the principal occupation in India. It is usually the only source of income for the big rural population in India. The country as a whole is entirely dependent on agriculture for its basic food requirements. The government has numerous amount of schemes, policies and other measures to promote growth in this sector – one of them being an exemption from income tax.

Information technology may seem similar the fact of exemption to income tax is all that we need to know when it comes to the taxation of agricultural income merely in that location is more to it. Let us have a look at the provisions of the police in this regard.

Meaning of Agricultural Income

The Income-tax Act has its own definition of agricultural income which constitutes the following 3 main activities:

I. Rent or revenue earned from agricultural land situated in India:

Hire is the amount received to grant the right to use the state. The scope of the possible sources of income that tin can exist derived from state is many. An example would be fees received for renewal of grant of land on charter.

However, the amount received on the sale of state is not covered under the definition of agricultural income.

Two.Income from agricultural land in the post-obit means:

Agriculture: The meaning of agronomics though not covered in the Act, has been laid downwardly past the Supreme Courtroom in the example CIT five. Raja Benoy Kumar Sahas Roy where agronomics has been explained to consist of two types of operations –basic operations andsubsequent operations.
- The basic operations would include cultivation of the country and consequently tilling of the land, sowing of seeds, planting and all such operations that require the man skill and effort directly on the land itself.
- Thesubsequent operations would include operations that are carried out for growth and preservation of the produce similar weeding, digging soil effectually the crops grown etc and also those operations which would make the production fit for employ in the market place similar tending, pruning, cut, harvesting, etc. Income derived from saplings or seedlings grown in a nursery would also be considered to be agronomical income whether or not the bones operations were carried out on land.
Through the performance of a process by the cultivator or the receiver of rent (in-kind) that results in the agricultural produce existence fit to be taken to the market place: Such processes involve manual or mechanical operations that are ordinarily employed to brand the agronomical produce fit for the market and the original graphic symbol of such produce is retained.
Through the sale of such agricultural produce: Where the produce does not undergo ordinary processes employed to become marketable, the income arising on sale would generally be partly agronomical (exempt) income and part of information technology will be non-agricultural (taxable) income.

The Income Revenue enhancement has prescribed rules to make this bifurcation regarding agronomical and not-agricultural produce for products like tea, java, rubber, etc

Functioning	Agricultural Income	Non-Agricultural Income
Growing and Manufacturing Tea	60%	forty%
Manufacturing Rubber	65%	35%
Growing and curing Coffee	75%	25%
Coffee grown, cured, roasted, and grounded with or without mixing chicory or other flavouring ingredients	60%	40%

III. Income derived from subcontract edifice required for agricultural operations:

The weather for classifying income derived from farm building equally agricultural income are as follows:

The building should be on or in the surrounding expanse of the agronomical land. Also, the hire receiver or cultivator of the country, past reason of his connection with the land, requires the building equally a house to stay or equally a storehouse or uses information technology for these kinds of situations
Either of the two conditions should be satisfied:
- The land is assessed by either land revenue or a local rate assessed and collected by regime officers; OR
- If the higher up condition is non satisfied, the land should non be located inside the following region:

Aerial distance from municipality*	Population every bit per last preceding census.
Within 2 kms	x,000 to 1,00,000
Within 6 kms	1,00,000 to 10,00,000
Within 8 kms	> Rs. 10,00,000

*Municipality includes municipal corporation, notified area commission, town area commission, boondocks committee and cantonment lath.

Note: Even where the local population is < 10,000, the land should too not be situated within the jurisdiction of the local municipality or cantonment lath.

In cases where the activities have merely some distant relation to land similar dairy farming, breeding, rearing of livestock, poultry farming, etc. they practice not class a role of agriculture income.

Examples of Agricultural Income

The following are some the examples of agronomical income:

Income from the auction of seeds.
Income from the sale of replanted trees.
Interest on majuscule received past a partner from a firm engaged in agricultural operations.
Income from growing flowers and creepers.
Rent received for agricultural country.
Profits received past a partner from a firm involved in agrarian produce or activities.

Examples of Non-Agricultural Income

Below are some examples of non-agronomical income:

Income from poultry farming.
Income from agricultural state held as stock-in-trade
Any dividend paid from an organization's agriculture income.
Income from dairy farming.
Income from bee hiving.
Income from cutting and selling timber copse.
Income from butter and cheese making.
Receipts from Tv serial shooting in the farmhouse.

Revenue enhancement of Agricultural Income

As discussed to a higher place, agronomical income is exempt from income revenue enhancement.

Still, the Income-tax Act has laid down a method to indirectly tax such income. This method or concept may be called the partial integration of agricultural income with non-agronomical income. It aims at taxing the non-agricultural income at college rates of tax.

Applicability:

This method is applicable to individuals, HUFs, AOPs, BOIs, and artificial juridical persons, when the following weather condition are met:

Internet agricultural income is greater than Rs. 5,000 during the year; and
Non-agricultural income is in a higher place the bones exemption limit:
- Greater than Rs 2.5 lakh for individuals below sixty years of age and all other applicable persons
- Greater than Rs 3 lakh for individuals betwixt 60 – 80 years of age
- Greater than Rs 5 lakh for individuals to a higher place eighty years of age

In uncomplicated terms, the non-agricultural income should be greater than the maximum amount not chargeable to tax (equally per the slab rates).

Thus companies, firms/LLP, branch societies, and local government are excluded from using this method.

Calculation of Agronomical Income

Frequently Asked Questions

I am a resident of India and have earned agronomical income from a land situated in Nepal, is information technology exempt from tax?

No, only agriculture income from state situated in India is exempt from revenue enhancement.

I am in the concern of growing tea, is it considered agronomics Income?

In the case of growing tea 40% of income is taxable as business income and the balance volition exist exempt as agriculture income.

What if the agronomical operation is carried out on urban country?

The agricultural income derived from agricultural operations carried out on urban or rural land is exempt from taxes.

Is the income earned from selling the fruits of the trees planted effectually the home considered agricultural income?

The trees planted on land can be classified as agricultural state if the weather mentioned earlier in this article are fulfilled. If the country comes inside the definition of agronomical land, then the income earned past selling fruits can be treated as agricultural income.

I have an income of Rs i.8 lakh from my business and an agricultural income of Rs 7.v lakh. Do I demand to file ITR?

One of the conditions to taxing agricultural income is that the assessee's non-agricultural income is more than the basic exemption limit. In this case, the income from the business is lower than the bones exemption limit. Yet, you must file the returns to disclose the exempt agricultural income.

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Exemption from Section 54B for sale of agronomical land