Agriculture land and income as per income tax

Taxability of agricultural income under income tax arises only when the other incomes exceeds the maximum amount not chargeable to tax.

Say for example if a persons agricultural income is Rs 5,40,000.

Now if income other than agricultural are Rs. 30,000.

Then in the above case since the other income doesnt exceeds the maximum amount not chargeable to tax(Rs 1,60,000).

So even the amount of agricultural income is very high tax liability will not arise.

Take another example if a persons agricultural income is Rs. 5,40,000

and income other than agricultural are Rs.1,80,000.

Then First of all tax will be calculated on total of both Rs. 7,20,000. i.e. Rs. 78,000.

Then calculate tax on the income (exclude the other income which crosses the maximum amount not chargeable to tax) Rs. 7,00,000 i.e. Rs. 74,000.

So tax liability on taxable income comes to Rs. 4,000.

Now see, if the agricultural income would have been Zero in the above case then the tax liability would have been only Rs. 2,000.

Thus,because of adding agricultural income in the total income the tax liability slidely rises.

The following points should also be kept in mind.

>the method of aggregation doesnt apply to firms and companies.

>it is applicable to assessee whose agricultural income exceeds Rs. 5,000.