Rent received by agricultural land

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 September 2011 an agricultural land was given to a dairy farm on rent(in previous year there was not any income from that land) and how should we treat that rental income, whhat should be its effect in the assessee's income tax return (asseessee is salaried person)

Yogesh Agarwal

Yogesh Agarwal (Expert)
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18 September 2011 It will b treated as an agricultural income and is exempt from tax. This income would be added to the taxable income for computation purpose.

Pragnesh

Pragnesh (Expert)
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18 September 2011 Dear Member, Income recd. from Agriculture Land is considered under Agricultural Income, Agriculture income is exempt under the Indian Income Tax Act. This means that income earned from agricultural operations is not taxed but with certain condition.

Now what is Agricultural Operation :-

Agricultural operation means that efforts have been induced for the crop to sprout out of the land. The ambit of agricultural income also covers income from agricultural operations, which includes processing of agricultural produce to make it fit for sale. Like the people who receive passive agricultural income in the form of rent or revenue, the people who actually carry out agricultural operations are also eligible for tax-free agricultural income.

Another condition, Land cultivation is must:-

Some measure of cultivation is necessary for land to have been used for agricultural purposes. The ambit of agriculture covers all land produce like grain, fruits, tea, coffee, spices, commercial crops, plantations, groves, and grasslands. However, the breeding of livestock, aqua culture, dairy farming, and poultry farming on agricultural land cannot be construed as agricultural operations.

Hence your income is taxable.

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