IT Department Uses Satellite Imagery to Crack Down on Dubious Agricultural Income Claims

In a major tax crackdown, the Income Tax (I-T) Department has uncovered discrepancies in agricultural income declarations using satellite imagery. A farmer claiming ₹7 lakh per acre in farm income and ₹1 lakh per acre in rental earnings for land around Hyderabad has come under scrutiny, as the figures don't align with actual cultivation records.

Tax Exemption Loophole Under Investigation

Agricultural income is exempt from income tax, making it an attractive loophole for converting undisclosed wealth into legal income. However, authorities are now targeting individuals who declare unusually high agricultural earnings to evade taxes.

In the past few days, the I-T investigation unit in Hyderabad has issued notices to nearly 50 individuals reporting agricultural income exceeding ₹50 lakh per annum or ₹5 lakh per acre, flagging them for potential tax fraud.

Satellite Imagery Reveals False Claims

The Hyderabad unit's probe is part of a nationwide effort to curb fraudulent farm income declarations. In Telangana and Andhra Pradesh, the focus is on landowners in Hyderabad and Visakhapatnam, where rapid urbanization has inflated land values and encouraged tax evasion.

Key findings from 150 flagged cases reveal:

• Undeclared land-use changes - Some farmland was never cultivated.
• Real estate misuse - Agricultural land converted into plots and real estate ventures, yet still declared as farm income.
• Capital gains tax evasion - Taxpayers wrongfully claiming tax exemptions on land sales that should be classified as business income.

Who Will Face Penalties?

Officials stress that only genuine agricultural activities qualify for tax exemptions. Under tax laws:

• Income from farming and leasing rural farmland is tax-free.
• Selling urban agricultural land or repurposing farmland is taxable.

With notices issued and probes intensifying, landowners failing to provide proof of farming activity may face penalties, tax reassessments, and legal consequences. The I-T Department remains firm on closing loopholes that allow black money to be laundered as farm income.