Agriculture & India’s Income Tax : Part 1 – Meaning of “agricultural income”

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The definition of “Agriculture Income” has been defined in “Section – 2 (1A), Income-tax Act, 1961-2015” .. this definition as per act is as follow,

(1A) 1“agricultural income”2 means—

    (a)  any rent or revenue derived from land which is situated in India and is used for agricultural purposes;

    (b)  any income derived from such land by—

         (i)  agriculture; or

         (ii)  the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or

         (iii) the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause ;

     (c)  any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on :

Provided that—

 (i)  the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other out-building, and

(ii)  the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated—

         (A)  in any area which is comprised 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 not less than ten thousand 3[***]; or

        4[(B) in any area within the distance, measured aerially,—

                    (I)  not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten thousand but not exceeding one lakh; or

                    (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than one lakh but not exceeding ten lakh; or

                    (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten lakh.

Explanation 1.—For the removal of doubts, it is hereby declared that revenue derived from land shall not include and shall be deemed never to have included any income arising from the transfer of any land referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of this section.

Explanation 2.—For the removal of doubts, it is hereby declared that income derived from any building or land referred to in sub-clause (c) arising from the use of such building or land for any purpose (including letting for residential purpose or for the purpose of any business or profession) other than agriculture falling under sub-clause (a) or sub-clause (b) shall not be agricultural income.

Explanation 3.—For the purposes of this clause, any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.

5[Explanation 4.—For the purposes of clause (ii) of the proviso to sub-clause (c), “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;]

You may also like to read “Agriculture & India’s Income Tax : Part 2 – Frequently Asked Questions ( FAQ )”

Reference : Income Tax Act, 2 ( 1A)

Agriculture & India’s Income Tax : Part 2 – Frequently Asked Questions ( FAQ )

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If you have already read “Agriculture & India’s Income Tax : Part 1 – Meaning of “agricultural income” continue with this post.

Question: I am a Farmer / an agriculturist. Is my income taxable ?

Answer: As per section10(1), agricultural income earned by the taxpayer in India is exempt from tax. Agricultural income is defined under section 2(1A) of the Income-tax Act. So, Agricultural income is not taxable. However, if you have non-agricultural income too, then while calculating tax on non-agricultural income, your agricultural income will be taken into account for rate purpose.

Question : Under the Income-tax Law is income from animal husbandry considered as an agricultural income ?

Answer : No

Question: What is income tax on Manufacture of Tea, Coffee and Rubber ?

Answer : Income derived from the sale of tea, coffee or rubbers grown and manufactured by the seller in India shall be computed as if it were income derived from business, and % as mentioned below of such income shall be deemed to be income liable to tax.

Tea : 40%, Rule – 8 – Income from the manufacture of tea
Coffee :  25%  Rule – 7B – Income from the manufacture of coffee
Rubber : 35% – Rule – 7A – Income from the manufacture of rubber

Question : What if Income which is partially agricultural and partially from business ?

Answer :  You can find the details in Rule 7 of Income Tax rules at website Link.

Rule 7 of income tax act – Income which is partially agricultural and partially from business .

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7 . (1)In the case of income which is partially agricultural income as defined in section 2 and partially income chargeable to income-tax under the head “Profits and gains of business”, in determining that part which is chargeable to income-tax the market value of any agricultural produce which has been raised by the assessee or received by him as rent-in-kind and which has been utilised as a raw material in such business or the sale receipts of which are included in the accounts of the business shall be deducted, and no further deduction shall be made in respect of any expenditure incurred by the assessee as a cultivator or receiver of rent-in-kind.

(2) For the purposes of sub-rule (1) “market value” shall be deemed to be :—

(a) where agricultural produce is ordinarily sold in the market in its raw state, or after application to it of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render it fit to be taken to market, the value calculated according to the average price at which it has been so sold during the relevant previous year;

(b) where agricultural produce is not ordinarily sold in the market in its raw state or after application to it of any process aforesaid, the aggregate of—

(i) the expenses of cultivation;

(ii) the land revenue or rent paid for the area in which it was grown; and

(iii) such amount as the [Assessing Officer] finds, having regard to all the circumstances in each case, to represent a reasonable profit.

Subsections of Rule 7 are,

Rule 7A of income tax act – Income from the manufacture of rubber

Rubber

7A.[(1) Income derived from the sale of centrifuged latex or cenex or latex based crepes (such as pale latex crepe) or brown crepes (such as estate brown crepe, remilled crepe, smoked blanket crepe or flat bark crepe) or technically specified block rubbers manufactured or processed from field latex or coagulum obtained from rubber plants grown by the seller in India shall be computed as if it were income derived from business, and thirty-five per cent of such income shall be deemed to be income liable to tax.]

(2) In computing such income, an allowance shall be made in respect of the cost of planting rubber plants in replacement of plants that have died or become permanently useless in an area already planted, if such area has not previously been abandoned, and for the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which, under the provisions of clause (31) of section 10, is not includible in the total income.

Reference – https://www.incometaxindia.gov.in/Pages/rules/income-tax-rules-1962.aspx

Rule 8 of income tax act –Income from the manufacture of tea

tea

8. (1) Income derived from the sale of tea grown and manufactured by the seller in India shall be computed as if it were income derived from business, and forty per cent of such income shall be deemed to be income liable to tax.

(2) In computing such income an allowance shall be made in respect of the cost of planting bushes in replacement of bushes that have died or become permanently useless in an area already planted, if such area has not previously been abandoned [, and for the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which, under the provisions of clause (30) of section 10, is not includible in the total income.]

Reference – https://www.incometaxindia.gov.in/Pages/rules/income-tax-rules-1962.aspx

Rule 7b of income tax act – Income from the manufacture of coffee

Coffee

7B. [(1) Income derived from the sale of coffee grown and cured by the seller in India shall be computed as if it were income derived from business, and twenty-five per cent of such income shall be deemed to be income liable to tax.

(1A) Income derived from the sale of coffee grown, cured, roasted and grounded by the seller in India, with or without mixing chicory or other flavouring ingredients, shall be computed as if it were income derived from business, and forty per cent of such income shall be deemed to be income liable to tax.

Explanation : For the purposes of sub-rules (1) and (1A) “curing” shall have the same meaning as assigned to it in clause (d) of section 3 of the Coffee Act, 1942 (7 of 1942).]

(2) In computing [the incomes referred to in sub-rules (1) and (1A)], an allowance shall be made in respect of the cost of planting coffee plants in replacement of plants that have died or become permanently useless in an area already planted, if such area has not previously been abandoned, and for the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which, under the provisions of clause (31) of section 10, is not includible in the total income.]

Related Posts – Agriculture & India’s Income Tax : Part 1 – Meaning of “agricultural income”

How to download home loan provisional interest certificate for State Bank of India ( SBI )

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Provisional interest certificate are required for submit the Income Tax return at the end of every financial year. If you are employeed or a businessman with any kind of loan, you need to submit the proof of how much is the loan, how much is the principal you repayed and how much is the interest you paid on the said loan, for that if you are a SBI customer you can get the provisioanl interest certificate by following ways ( NOTE: most of other banks also gives the certificate using your net banking account ).

Login to SBI website at https://retail.onlinesbi.com/retail/login.htm

once logged in, click “e-Services” from top menu, like below,

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from the openend page, click “Certificates”

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then you will get the list of all loans you have, from this select the laon account and click “Submit” you will get the home loan provisional interest certificate opened,

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below that page there is a option for “View / Download in PDF” using which you can download the provisional interest certificate which is required for file IT return.