This write-up will update you about Tax Treatment – Agriculture Income. Hope you will enjoy this updates with dear ones.

Image result for Tax Treatment of Agriculture incomeTax Treatment – Agriculture Income

Agriculture income

As per Section 10(1), agriculture income is the income which is exempt in the income tax if that income in earned by taxpayer in India.

As per Section 2(1A): agriculture income means:-

  • Any Income derived from land, which is situated in India and used for agricultural purpose.
  • Any income derived from such land by agriculture operations including processing of agricultural produce.
  • Any income attributable to a farm house subject to satisfaction of certain conditions specified in this regard in section 2(1A). Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.

ITR Forms for agriculture income of individual and firm

ITR-1&2 (for individual)

ITR1 if agriculture income is below Rs. 5000.

ITR2 this return form is to be used by an individual or a Hindu undivided family whose total agricultural income for the assessment year 2017-18 is more than Rs. 5,000.

ITR-5 (for firm)

This income tax return is meant for firms, LLPs, AOPs (Association of persons) and BOIs (Body of Individuals).

Business covered under agriculture industry

  • Fruits and vegetables
  • Flowers
  • Plantation crops
  • Spices
  • Aromatic plants
  • Medicinal plants
  • Seed and agri-chemical producers

Tax benefits to agriculture business

  1. No Tax on sale of agricultural land.
  2. Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases.

Section 54B gives relief to a taxpayer who sells his agricultural land and acquires another agricultural land from the sale proceeds.

Conditions to be satisfied to claim the benefit of this Section:

  1. The assessee must be an individual or a HUF.
  2. The agricultural land should have been used for agricultural purposes. It may be a long term asset or a short term asset.
  3. It must have been used either by the assessee or his parents for agricultural purposes in at least two years immediately preceding the date on which the transfer of land took place.
  4. The assessee should have purchased another land, which is being used for agricultural purposes, within a period of two years from the date of sale.