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
Add non-agricultural income with net agricultural income. Compute tax on the aggregate amount.
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.
Deduct the amount of income tax calculated in step 2 from the income tax calculated in step 1
i.e. Step 1– Step 2.
Deduct any applicable rebate from the amount of tax obtained in step 3.
Add surcharge, if applicable, to the amount obtained in step 4 above.
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)