Income accruing from agricultural land which has been leased out for vegetable farming is around Rs 30000/00 .whether this income is to be treated as tax free agricultural income or as rental income liable to tax for assesment year 2013-14.
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Tax treatment of income from leased agricultural land
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As per Sec 2(1A) agriculrure income means any rent or revenue derived from land which is situated in India and is used for agriculture purpose. Hence, it is an exempted income under Sec 10(1).
However, if the assessee is an individual, HUF, unregisterd firm, AOP, BOI or other artificial person and net agriculture income exceeds rs. 5000 then, tax on agricuture income is leviable indirectly:
Step 1 - first tax has to be calculated on the total income (including agriculture income)
Step 2- calculate Tax on Maximum Exemption Limit + Agriculture Income
Step 3 - Deduct the tax computed in Step 2 from tax computed in Step - 1
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