AGRICULTURAL INCOME

1) Any rent or revenue derived from land which is situated in India and is used for agricultural

purposes2) Any income derived from such land by

agricultural operations or any process by cultivator or receiver of rent-in-kind, which render the produce fit for the market or the

sale of such produce

3)Any income from a farm house:The following conditions to be satisfied-• The building is owned and occupied by the cultivator or receiver of the rent or

revenue of any such land.• It is situated on or in the immediate vicinity of the agricultural land• The building is used as dwelling house or a store house or an out house by the

cultivator or receiver of rent-in-kind• The land is either assessed to land revenue in india or is subject to a local rate

assessed and collected by the officers of the governmentIf the land revenue or local tax is not payable on such land;-the land is situated in non urban area-the land is situated within municipality or cantonment board jurisdiction, has a

population of less than 10,000 or-the land is beyond a notified distance( maximum 8 kms)from the local limits of any

such municipality or cantonment board

Partly agricultural incomeFrom the composite income, for determining the non-agricultural chargeable to tax,

the market value of any agricultural produce which has been raised by the assessee and which has been utilized as a raw material in such business, shall be deducted.

Market value:-average price at which it has been so sold if ordinarily sold for example of sugar

factories.-when not ordinarily sold-• The expenses of cultivation• The land revenue or rent paid for the land on which it was grown• The reasonable profit-Income from growing and manufacturing of tea- 60% is AI,40%is NAI-Income from growing and manufacturing of centrifuged latex- 65% is AI, 35%NAI-Income from growing and manufacturing of coffee-a)75%AI,25%NAI from the coffee grown and cured by the seller b)60%AI,40%NAI from the coffee grown, cured, roasted and grounded

INTEGRATION OF AI AND NAI

• For Individual, Hindu Undivided Family, Association Of persons and Body of individuals whose NAI exceeds the inimum taxable limit and the agricultural incoe exceeds Rs 5000

Chart showing integration

• Non agricultural income + Agricultural income = Aggregate Income

• Tax on aggregate income• Agricultural income + maximum exempted limit• Tax on above total• Deduct 4th point from the 2nd point• Add education cess@3%• Less TDS and Tax paid in advance = net tax

payable