Agricultural income exemption as per Income tax act

Agricultural income are exempted as per Income tax act u/s 10(1)

Calculation of Agricultral Income Exemption under the Income Tax Act 1961:

Two conditions which need to satisfied for partial integration are:

1. The net agricultural income should exceed 5,000 for the year and

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

Agricultural Income exemption Calculation Steps

Step 1:

 Add non-agricultural income with net agricultural income. Compute tax on the aggregate amount.

Step 2:

Add net agricultural income and the maximum exemption limit available to the assessee (e.g.Rs,200,000/2,50,000 & 5,00,000). Compute tax on the aggregate amount.

Step 3:

Deduct the amount of income tax calculated in step 2 from the income tax calculated in step 1

i.e. Step 1– Step 2.

 Step 4:

 Deduct any applicable rebate from the amount of tax obtained in step 3.

 Step 5:

 Add surcharge, if applicable, to the amount obtained in step 4 above.

 Step 6:

 The sum so arrived at shall be increased by education and higher secondary cess.

These steps are applicable whenever tax liability is to be worked out e.g. self-assessment tax, advance tax, tax on regular assessment)

For descriptive regulation please read Agricultural Income and Tax Liability

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