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ITR Filing Due Date Extended; Know if Agriculture Income is Taxable?

Sugandh Bhatnagar
Sugandh Bhatnagar
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The Central Board of Direct Taxation has extended the Income Tax Return Filing date of FY 2021-22 for Individuals till 31 December, 2021. If you have Agricultural Income, you can still file for ITR, however, as per section 10(1), agriculture income earned by the taxpayer in India is exempt from tax.

In recent times, we have seen a lot of people leaving their well-established careers and package of lakhs of rupees only to start farming and earn huge profits from it.

In India, the agricultural Income is not taxable under section 10 (1) of the Income Tax Act as it is not counted as a part of an individual’s total income. However, the state government can levy tax on agricultural income if the amount exceeds Rs.5, 000 per year.

What Comes Under Agriculture Income?

Section 2 (1A) of the Income Tax Act defines the conditions wherein sources can be considered to be generating agricultural income. The section’s definitions basically point out the following as the sources for agricultural income:

  1. Revenue generated through rent or lease of a land in India that is used for agriculture purposes

  2. Revenue generated through the commercial sale of produce gained from an Agricultural Land

  3. Revenue generated through the renting or leasing of buildings in and around the agricultural land subject to the following conditions

Tax on Sale of Farm

  • Land used for agriculture cannot be a part of capital asset. If a farmer sells a farm, then the income from it is not counted in Capital Gain. There is no tax on it.

  • If any land falls in a municipality or cantonment with a population of 10 thousand, then it will not be called a farm.

  • Apart from this, there are many clauses, in which it has been clarified that what is the definition of farm.

Tax on The Sale of Agriculture Land in Cities

Section 54B gives relief to taxpayers from selling agricultural land which does not fall in the villages but is located in the city. In this case, the taxpayer has to sell one land and buy another similar land with the amount received, only then the tax will be exempted.

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