Know Income Tax on Agriculture Income

It is said that Indian farmers represent the majority of the Indian workforce. It is the major source of income for most rural Indians. The whole country depends totally on agriculture for the basic necessities of food. That is why the government has launched a number of plans and benefits to increase agricultural income. In the end, there are important details for farm income tax that you should know before you file the ITPR. In the following article, you will find out about farm income tax.

How do we define income from agriculture?

Pursuant to section 2(1A) of the Income Tax Act, activities that produce agricultural income must meet certain criteria. According to the section's definitions, farm income can be derived from these sources:

Income from farming comes from renting or renting farmland in India.

• Income from farming comes from renting or renting farmland in India.
• Profits from the commercial sale of farm property from the ownership of farmland.
• A substantial income can be made by renting or renting farm buildings, subject to certain conditions.
• The structure should be occupied by a farmer who has leased the property or income.
• The structure serves as a storage facility, house, or outdoor washroom.
• An assessment was made for the purpose of generating revenue from the land or a tax imposed by the municipality on the property on which the building is located.
  
  

Important Note: Dairy, livestock and livestock, poultry and other activities that are clearly related to agriculture do not count towards farm income.

 

What percentage of revenue from agriculture is tax-free?

In certain instances in certain situations, all agricultural revenues are exempt from taxation.

• Nothing short of Rs. 5,000 on agricultural income are exempt.
• Agricultural income is the only option for people without another source of income.
• If your total earnings (excluding farm income) are below the amount of your basic exemption.

Still, you should complete tax return filing and take advantage of its many advantages.

 

What are the instances of the income from agriculture?

·  Trees that were planted and then are being sold.

·  Earnings from the sale of seeds.

·  Farmland rental income.

·  The earnings from cultivating vines and flowers.

·  Profits generated by a firm that is involved in agriculture or services from an associate

·  An agricultural company is paid interest for the amount they've put into the business.

It is the Capital Gains Tax Treatment of Farmland

Taxpayers who sell farmland and use the profits to purchase new land are eligible for section 54B, which provides relief for capital gains. To be eligible for Article 54B benefits, you must meet the following requirements:

 

·  To be tax-efficient the beneficiary must be a natural person or HUF, and the asset that is transferred must be land that is agricultural whether short-term or long-term.

·  To be able to avoid capital gains tax the land must have been used for farming by the taxpayer either his parents or other members of the HUF during a minimum period of 2 years prior to the date of transfer and the taxpayer has to purchase another piece of land within two years after the date of transfer to not pay capital gains tax for the property that is purchased.

What is my tea-growing earnings fall under the definition of "agriculture"?

In the case of tea-growing, 40% of income is taxed as commercial income, and the remainder is regarded as income from agriculture.

What can you do to increase your income from agriculture?

It is possible to increase your income by exporting agricultural products. Participating in the APEDA registration and gaining training and other benefits can help increase your income substantially.