Tax on agricutual income

Agricultural income refers to income earned or revenue derived from sources that include farming land, buildings on or identified with an agricultural land and commercial produce from a horticultural land.

Agricultural income is defined under section 2(1A) of the Income Tax Act, 1961. According to this Section, agricultural income generally means:
(a) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes.

(b) Any income derived from such land by agriculture operations including processing of agricultural produce so as to render it fit for the market or sale of such produce.

(c) Any income attributable to a farm house subject to satisfaction of certain conditions specified in this regard in section 2(1A).

(d) Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.

As per Section 10(1) of the Income Tax Act, 1961, agricultural income is exempted from taxation. The central government cannot levy tax on the agricultural income received. However, agricultural income is considered for rate purposes while assessing the income tax liability if the following two conditions are met:

# Net agricultural income is greater than Rs. 5,000/- for previous year.

# Total income, excluding net agricultural income, surpasses the basic exemption limit (Rs. 2,50,000 for individuals below 60 years of age and Rs. 3,00,000 for individuals above 60 years of age.

Therefore, when these conditions are met, tax liability shall be computed.

In this regard the tax computed on Agricultural Land could be calculated by using the given below formula.

Let us assume,

Agricultural income = X
and,
Other income = Y.

Thus, Tax computed on X+Y = B1.

Now,

Basic Exemption Slab for Income Tax Payment = A.
Tax Computed on A+X = B2.

Therefore,
Actual Income Tax Liability = B1-B2 [Source- coverfox].

Hope It Helps

Regards
Kevin M. Paul

So in my case

Income	200000
Particulars	Amount
Tax on Rs 2,50,000	Nil
Total Tax	0
Agricultural Income	300000
Particulars	Amount
Tax on Rs 2,50,000	Nil
Tax on next Rs 250000 @ 5%	12,500
Tax on next Rs 50000 @ 20%	10,000
Total Tax	22,500
Total tax liability (0-22000)	-9500

Is this correct - How can tax be inegative?