Tax on Agricultural Income in India | Calculation

Agricultural Income is not Taxable in India. However, a method has been laid down to levy tax on agricultural income in an indirect way. This concept is known as partial integration of taxes. It is applicable to individuals, HUF, unregistered firms, AOP, BOI and artificial persons. Two conditions which need to satisfied for partial integration are:

1. The net agricultural income should exceed Rs. 5,000 p.a., and

2. Non-agricultural income should exceed the maximum amount not chargeable to tax.

Computation of Tax on Agricultural Income In India

Step 1: Add non-agricultural income with net agricultural income.

Step 2: Compute Tax on Step 1 (not including Cess)

Step 3: Add net agricultural income and the maximum exemption limit available to the assessee.

Step 4: Compute tax on Step 3. (not including Cess)

Step 5: Compute Net Tax Payable ( Step 2 – Step 4)

Step 6: The sum so arrived at shall be increased by education cess @2% and secondary and higher education cess @1%.

Tax on Agricultural Income Calculator

We have attached below a Tax on Agricultural Income Calculator coded on excel.

agriincome

You can download the calculator from below.


'Tax on Agricultural Income in India | Calculation' have 22 comments

  1. October 17, 2012 @ 5:43 pm Chahna

    What if the agricultural income is less than 5000 p.a. & the second condition is still satisfied i.e. the non agricultural income is exceeding the basic exemption limit toh??

    Reply

    • October 18, 2012 @ 6:02 am Joshua

      Both the conditions are to be satisfied for partial integration. In the case you have said income from agriculture will be fully exempt under section 10(1). The Non Agricultural Income will be taxed at normal rates.

      Reply

    • August 28, 2013 @ 5:45 am shiva

      Sir one of the partnership firm earning by the doing agriculture fertilizer , input is exempted from the tax but i want know the partially payable tax

      Reply

  2. February 6, 2013 @ 6:47 am Parveen Kumar

    I have income of about 14 lakhs per annum. If I have agricultural income of about 20,000.oo so how I will compute the tax and what I will have to pay extra other then routine tax on 14 lakhs

    Reply

    • February 6, 2013 @ 8:46 am Joshua

      You have to compute the tax for Rs. 1420000 (Agricultural + Non Agricultural Income). Then you will have to calculate the exemption (Rebate) you can get for your agricultural Income. If you are a Resident Men less than 60 years of Age, You will get around Rs.2000 as Rebate on Income Tax for your Agricultural Income. Say, You can reduce your tax by Rs.2000.

      Reply

  3. March 26, 2013 @ 6:15 pm Manoj

    1. Can we deduct investments u/s 80c while calculating the tax at normal rates in step 2 ???
    2. What is the use of adding the basic exemption amount to agri income (in step 3) while we are actually deducting it again (in step 4)

    Reply

    • March 27, 2013 @ 4:26 pm Anne Jose

      This Article explains only the Rebate Calculation. The Non Agricultural Income (as given above) must be arrived after deducting deductions under section 80C.
      You should deduct 80C even before step 1 from the Non Agricultural Income.
      Then Follow Step 1..

      Reply

    • March 27, 2013 @ 4:38 pm Anne Jose

      Agricultural Income is exempted from Tax under Section 10(1) of the Income Tax Act. The Government however Taxes Agricultural Income Indirectly if you have Non Agricultural Income along with your Agricultural Income and it exceeds your basic Exemption Limit. However the government allows a rebate on that Income (Say a discount on Tax).
      On the First two steps you calculate Normal Tax on Total (Non Agricultural + Agricultural) Income.
      On Step 3 and 4 you calculate the Rebate (or discount in a layman’s language) given for Agricultural Income. This Calculation is independent from the above calculation.
      Then you Deduct [Tax – Rebate] for Net Tax Payable.

      Reply

  4. June 5, 2013 @ 10:52 am manzoor

    I have agriculture income is it necessary for me to fill IT RETURN ,please reply to me

    Reply

  5. June 26, 2013 @ 9:53 am Sam

    My non agricultural income is around 10 Lakhs and my agricultural income is 3 Lakhs.
    Can i fill my return online, if yes then which ITR form do i need to fill because in ITR-1 i couldn’t find any field to enter agriculture income.

    Reply

  6. July 4, 2013 @ 9:11 am manzoor

    i have only agricultur income is it necessary for me to file IT return

    Reply

  7. July 19, 2013 @ 3:46 am Ritesh khetan

    Thnx a lot. I got the satisfactory answer of my doubt.

    Reply

  8. August 3, 2013 @ 6:01 pm manzoor

    I’m submitted my iT return from last three years but now my agricultural income is 120000 + non agricultural income is 125000 is it necessary for me to file IT return this year

    Reply

    • August 4, 2013 @ 2:57 am Joshua

      Yes, It is advisable that you Should File a Null (Zero Tax) Return.

      Reply

  9. August 5, 2013 @ 2:40 pm manzoor

    I windup my non agricultural business due to some losses also having agricultural income about 120000 per annum, already submitting my IT return from last 3 year’s is it necessary for me to file IT return for next financial year

    Reply

    • August 6, 2013 @ 2:03 am Joshua

      Yes, It is advisable that You should file a Income Tax Return.

      Reply

  10. August 9, 2013 @ 4:47 am manzoor

    I windup my non agricultural business Due to some losses now I have only agricultural income is it necessary for me to file IT return

    Reply

  11. February 9, 2014 @ 4:45 pm Anoj Kumar Agarwala

    Sir,
    I have a business income and agricultural income and want to get some clarifications about agricultural income.
    Please Contact: 09823466766

    Reply

  12. February 12, 2014 @ 10:31 am Anoj Agarwala

    Sir,
    Presently I am a partner in a construction firm . I want to start another venture of agriculture business. What method (Ind, firm or company) gives me 100% exemption on income tax. In short i want to avail the benefit of tax exemption on agri income.

    Reply

  13. February 12, 2014 @ 10:34 am Anoj Agarwala

    Sir,
    I am a partner in a construction firm and want to start a agri business. Whether ind, firm or co gets 100% EXEMPTION on taxes. Shall i start as ind or open a partnership firm or a co.

    Reply

  14. March 26, 2014 @ 4:02 am SUKUMAR

    Is income from Mushroom Farming considered as Agricultural income and exempted from Income tax.

    Reply

  15. November 13, 2014 @ 12:51 pm Senthil Raja

    HI,

    What are the documents need for showing the Agriculture income in the Tax return

    Reply


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