It on agriculture income

This query is : Resolved

NITIN (Querist)
Follow

21 August 2011 Dear Sir,
(i) I Have dudh dairy business and my gross income from this business rs. 170500 and
(ii) My Father Income from Agriculture Rs. 260000. and I am Received (My share) in agriculture Income rs 70000.
So can I merge this agriculture income Rs. 70000 in my Total income. and if I added this income in my total any tax liabilities on that.
(Note: Agriculture land on my Fathers name)

Pl give me suggestion.

Thanks

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

21 August 2011 1. Tax is levied on Net Profit.
You can deduct expenses from your gross income.
2. Whatever you have received from your father, can be told as the same has been received towards the land cultivated and looked after by you. It is not necessary
that the farmer should be a land lord also.
So you can treat it as Agriculture Income.
3. If 170500/ is your net income from milk business, for finding out Income for rate purpose, you may add Agri. Income and can calculate tax on 170500+70000.

4. Tax on Agriculture Income has to be reduced ( i.e. Tax on 160+70=230k) from tax calculated in para 3 above.
5. The Result will be the net tax liability.

Message likes : 1 times

CA. Nitin Agrawal

CA. Nitin Agrawal (Expert)
Follow

21 August 2011 Income Tax Act provide for indirect way of taxation of Agriculture income.

Agricultural income is considered for rate purpose while computing tax of Individual/HUF/AOP/BOI/AOP

What does the term Agricultural Income mean?

As per Income Tax Act income earned from any of the under given three sources meant Agricultural Income;

(i) Any rent received from land which is used for agricultural purpose.

(ii) Any income derived from such land by agricultural operations including processing of agricultural produce, raised or received as rent in kind so as to render it fit for the market, or sale of such produce.

(iii) Income attributable to a farm house subject to the condition that building is situated on or in the immediate vicinity of the land and is used as a dwelling house, store house etc.

Now income earned from carrying nursery operations is also considered as agricultural income and hence exempt from income tax.

Let me try to explain the IT calculation on it in easy way:

Step1: Calculate Income tax considering
Agriculture income with other
income.

Step2: Calculate Income tax on Basis
exemption limit & Agriculture
income.

Step3: Deduct Step2 amount from Step 1
Amount, is the Income tax payable
liability.

Step4: Net Tax liability = Step1- Step2

Now Cheers

Upgrade to CAclubindia Pro. Subscribe Now!