Income Tax News: Attention! Government Rules on Taxing Agricultural Income Revealed, Check Details Here

Income Tax News: Clear guidelines regarding the implementation of the tax on agricultural income have been released by the government. The farmer's earnings from farming have been excluded from taxes. Nonetheless, certain agricultural income has been retained in the tax system subject to restrictions and exclusions.

Commercial Crops Exemption

On the other hand, the federal and state governments have maintained the cultivation of certain crops under the commercial category and have exempted the income from them from federal taxes. Allow us to explain it in more detail. Even though there is no tax on income over Rs 3 lakh per year, income tax regulations require that individuals file income tax returns. Likewise, the government has made annual income up to Rs 7 lakh lakh free from taxes, subject to certain limits, for the working class. Under such circumstances, the government has additionally released explicit directives concerning the imposition of an income tax on agriculture. Income from farming or the farmer has been excluded from taxation under income tax regulations.

Reserved Agricultural Income

Nonetheless, certain agricultural income has been retained in the tax system subject to restrictions and exclusions. State and federal governments, on the other hand, have maintained the cultivation of certain crops under the commercial farming classification and have included the revenue from these crops in the tax system subject to certain exemptions and limitations. Let's examine the types of farming income that are subject to tax laws.

This kind of farming is covered by taxes

The Income Tax Act of 1961 states that an agricultural income of more than Rs 5,000 must be reported in the income tax return (ITR). Income from certain agricultural activities on agricultural land has been exempt from taxation, per Section 2 (1A) of the Income Tax Act.

• The proceeds from the growing of tea are subject to taxation.
• In a similar vein, revenue from the production of rubber or coffee is subject to taxes.
• The proceeds from sheep farming are subject to taxation.
• The revenue derived from dairy work is subject to taxation.
• The tax net also includes proceeds from the sale of trees.
• The trade in animals is likewise subject to taxation.
• Rent received from a building or piece of land is also considered income for tax purposes.
• On these earnings, the government has imposed a tax, though there are some limitations and exemptions.

Tax Breakdown for Tea Farmers

When a farmer grows tea, 40 percent of the total income is subject to taxes, with the remaining 60 percent receiving tax exemptions. The central government has excluded income from commercial farming, which includes the cultivation of crops like tea, rubber, and coffee, from paying taxes. States may have different lists of commercial crops, and there may be variations in tax rates as well.

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