7.2. Exemptions From Agricultural Income

Question 1

2(1A) Agricultural income

Answer 1

agri income may arise in following

1. Any rent or revenue derived from land situated in india & used for agricultural purpose (by anyone) i.e. tenant or owner
2. Any income derived from such land by agricultural operations
3. Income derived by processing agricultural produce ( process should be ordinary employed to render the produce fit to market)
4. Income from farm building (farm house) on rural agricultural land
5. Income derived from sapling or seedlings grown in nursery = deemed agri. Income

Question 2

Partial merger

Answer 2

Agri income in india is exempt

It is to be first included in total income for determining rate at which other income will be chargeable if following condition are met:

(a) assessee in ind/huf/aop/boi/ajp (slab rates)

(b) net agri. Income exceeds ₹5000

(c) total income which is taxable (other than agri.) Exceeds max amt not chargeable to tax (I.e. BEL)

Question 3

Partial merger

Answer 3

Agri income in india is exempt

It is to be first included in total income for determining rate at which other income will be chargeable if following condition are met:

(a) assessee in ind/huf/aop/boi/ajp (slab rates)

(b) net agri. Income exceeds ₹5000

(c) total income which is taxable (other than agri.) Exceeds max amt not chargeable to tax (I.e. BEL)

Question 4

If 3 conditions are met then,

Answer 4

Find out total income by considering fully exempt then find out tax payable under:

Step 1- find out (total income + net agri. Income) for tax calculation only

Step 2- find out basic tax on Step 1 (before cess)

Step 3- find out (BEL + Net Agri. Income)

Step 4- findout basic tax on Step 3 (before cess) this will be called rebate on income

Step 5- tax payable =( tax on Step 2- Step 4)

Step 6- then apply surcharge (rebate & cess)

Note- for limits of rebate/ surcharge only see taxable income

Question 5

How to bifurcate total income into agri & non agri

Answer 5

Mfg of rubber, tea, coffee- composition

For other common busi.-
Step 1- assumes agri produce used in business is sold in market

Agri. Income = FMV- Agri. Expense

Step 2- assume agri. Produce is purchased from market

Business income= sale value - FMV