Zero Tax on Agricultural Income

Zero Tax on Agricultural Income – Agricultural income in India refers to income earned from agriculture, farming, or cultivation of land. Under Section 10(1) of the Income Tax Act, 1961, such income is fully exempt from income tax, meaning it is not included in the total taxable income of the individual. Agricultural income includes: Income from land situated in India used for farming, horticulture, or livestock. Revenue from sale of crops or produce grown on such land. Income from agricultural operations like leasing land for cultivation. However, while agricultural income is exempt, it may be considered for rate purposes if the taxpayer has other taxable income, which can slightly affect the tax rate applied to non-agricultural income.

Example: A farmer earns ₹2 lakh from the sale of wheat from their farmland. Since this is agricultural income, it is fully exempt under Section 10(1), and no tax is payable on it.