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What counts as agricultural income
| Income | Agricultural? |
|---|---|
| Sale of crops grown on your land | Yes — exempt |
| Rent from agricultural land | Yes — exempt |
| Dairy, poultry, fisheries | No — business income |
| Interest on crop-sale proceeds in the bank | No — taxable interest |
| Sale of trees grown naturally | Generally no |
Selling agricultural land
- Rural land (outside municipal limits and the notified distance — 2 km, 6 km or 8 km depending on population) is not a capital asset: no capital-gains tax
- Urban agricultural land is a capital asset: long-term gain at 12.5% (or 20% with indexation for land bought before 23 July 2024)
- Section 54B: reinvest gains in other agricultural land within 2 years to claim exemption, if the land sold was used for agriculture for 2 years
- Compensation on compulsory acquisition of urban agricultural land is exempt
Partial integration
If agricultural income exceeds ₹5,000 and other income exceeds the basic exemption limit, agricultural income is added only to find the rate of tax on other income. Our agricultural income calculator does the computation.
GST
An agriculturist selling his own produce does not need GST registration. Farm machinery and inputs now carry 5% GST.
Common mistakes
- Treating dairy income as agricultural
- Not filing a return when agricultural income exceeds ₹5,000 along with taxable income
- Assuming all farm land sales are tax-free
Frequently asked questions
No tax is payable, but filing helps for loans and records, and becomes necessary when other income crosses the limit.
Last reviewed on 11 November 2026 by Vinay Jaglan, VJ & Associates. Law and portal screens change — verify before acting, or ask the office.
