CA Umesh Sharma
Arjun (Fictional Character): Krishna, what is the recently submitted report by CAG (Comptroller and Auditor General of India) relating to agriculture Income?
Krishna (Fictional Character): Arjuna, CAG (Comptroller and Auditor General of India) has prepared a report on Assessments Relating to Agriculture Income which was presented in the 49th report of the Public Accounts Committee which clearly stated that the rich farmers whose agriculture income exceeds Rs 10 lakh per year limit, will face stricter scrutiny of agricultural income.
Arjun (Fictional Character): Krishna, what is meant by Agriculture Income?
Krishna (Fictional Character): Arjuna, 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.
Also, Section 10(1) of the Income tax act exempts Agriculture Income from Tax.
Arjun (Fictional Character): Krishna, what are things which one should maintain if he/she is earning agriculture Income?
Krishna (Fictional Character): Arjuna, since the income which taxpayer is earning is Exempt thus taxpayer should properly maintain documents supporting expenditure incurred in earning agriculture income, sale Invoices of crop sold, documents relating to ownership/rights over the agriculture land, cash book and/or bank statements of the assessee reflecting receipts on account of sale of agriculture produce, ledger accounts bills and invoices.
Arjun (Fictional Character): Krishna, what are special points highlighted by Public Accounts Committee in its report?
Krishna (Fictional Character): Arjuna, the department has developed Computer Aided Scrutiny Selection (CASS) software for selecting cases of Scrutiny. CASS is a centralized system for selection of cases of scrutiny and special Scenarios have been included in CASS for selection of cases having agriculture income above a threshold (i.e., Rs Ten Lakhs).
The Finance Ministry should develop its mechanism to directly scrutinize tax-free claims in cases when agricultural revenue exceeds ten lakh rupees, according to the parliamentary panel.
Arjun (Fictional Character): Krishna, what should the taxpayer learn from this?
Krishna (Fictional Character): Arjuna, the Government here wants to convey that if taxpayer is earning Agriculture Income above 10 Lakhs, then he/she should take special care in maintaining the Books of accounts and should make sure that income disclosed in Income tax Return is accurate to avoid any problem during Scrutiny.
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