Tax treatment and Taxability of Agricultural Income
09/02/2015

Tax Treatment and taxability of agriculture income in india is not on central govt. it is the matter of state goverment.

Online PR News – 02-September-2015 – Jaipur rajasthan – Tax treatment and Taxability of Agricultural Income
Agricultural income in India is exempt under Section 10(1) of the I.T.Act, 1961. So the income earned by way of agricultural operations, as mentioned in Section 2(1A) of the said Act, is not taxable as Constitution gives exclusive power to make laws with respect to taxes on agricultural income to the State . However while computing tax liability on non-agricultural income, agricultural income is also taken into consideration only for tax caluculation purpose.
Agricultural Income according to section 2 (1A) of the said Act
Section 2 (1A) of the Income Tax Act, 1961 defines “agricultural income” as an income under the following three sources:
(i) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes: The assessee will not be liable to pay tax on the rent or revenue arising from agricultural land subject to the conditions:
(a) The land should either be assessed to land revenue in India or be subject to a local rate assessed and collected by officers of the Government.
(b) In instances where such a land revenue is not assessed or not subject to local rate, the land should not be situated within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board, and which has a population of more than ten thousand (according to the last preceding census which has been published before the first day of the previous year in which the sale of land takes place); or it should not be situated:
more than 2kms. from the local limits of any municipality or cantonment board and which has a population of more than 10,000 but not exceeding 1,00,000; ornot being more than 6kms. from the local limits of any municipality or cantonment board and which has a population of more than 1,00,000 but not exceeding 10,00,000;
or
not being more than 8kms. from the local limits of any municipality or cantonment board and which has a population of more than 10,00,000.
(c) The revenue must not include any income arising out of transfer of such land.
Further, a direct nexus between the agricultural land and the receipt of income by way of rent or revenue is essential. (For instance, a landlord could receive revenue
from a tenant.)
(ii) Any income derived from such land by agricultural operati
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