14 October 2012
Any income arises from the Agricultural is exempted to income but first such income also added to our total income for the rate purpose and then we have to get the agricultural income tax exemption.Computation of tax who have agricultural income is as follows.
1) First compute tax payable by considering the income after adding of agricultural income i.e Rs.600000 in your case.
2) Now add the agricultural income to the basic exemption limit and then compute tax on it. I.e 200000(assumed basic exemption limit)+175000 = 375000
3) Now net tax payable = tax at step 1 - tax at step 2
4) Compute and add Education cess @3% on tax at step 3 is the total tax payable.
Now total tax payable computation to your case:
1) tax payable on Rs.600000 = 50000
2) tax on Basic exemption limit + agricultural income I.e on Rs. 375000 = 17500
Due to the agricultural income your tax payable liability is increased by Rs.10300. Because of adding of agricultural income to your total income changes the tax slab rate.
Note: Income after adding of agricultural income to your total income is in 10% slab then we can say agricultural income fully exempted otherwise not.
If in your case assume agricultural income is Rs.75000 only then Income after adding of agricultural income is Rs 500000 lacs only i.e your income including agricultural income and excluding agricultural income both are in 10% slab then you will get full exemption of agricultural income.
So we called as agricultural income is taxable for the purpose of rate of tax.
22 February 2013
In case if a farmer having income from only agriculture of any limit is fully exempted ? ? . Say, he has income from agriculture Rs. 25,00,000/- out of which i has invested 15,00,000/- in FD with some bank. whether this income also considered as derived basically from agriculture?
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