AGRICULTURAL INCOME

Agriculture is a backbone of Indian economy and it is a state subject. Even though it is totally exempted from tax under Sec.10 (1) of the Income tax act of 1961, it is taken in to account for the tax calculation in certain class of Assessee.

Definition of agriculture income

Sec2 (1A) of the Act defines agriculture income as,

1.Any rent or revenue derived from land that is situated in India and is used for agricultural purpose.

2.any income derived from such land by-

a) Agriculture, or
b) Any process ordinarily employed by a cultivator or receiver of rent in kind to make the produce fit to be taken to market, or
c) The sale by a cultivator or receiver of rent in kind of the produce in respect of which no process has been performed other than a process of the nature described in the above paragraph.

3. Any income derived from farmhouse.

Ie agricultural income is an income as any rent or revenue derived from agricultural land that is situated in India and is used for agricultural purpose. Thus income from basic operation like cultivation, growing crops etc and secondary operation like removal ,digging etc can be classified as agricultural income and is exempt from tax.

CRITERIA TO DETERMINE AGRICUTURE INCOME

1.Income derived from land.
2.land is used for agricultural purpose
3.land is situated in India

TYPES OF AGRICULTURAL INCOME

1.Rent or revenue from agricultural land, which is situated in India
2.income derived from agriculture
3.Income from any process used by the cultivator to render the agricultural product marketable
4.Income from the sale of agricultural product raised or received as rent in kind
5.Income from building used for agriculture operation and is immediate vicinity of agricultural land.