vinujaglan.com · Founder's official site What counts as agricultural income
- Rent or revenue from agricultural land in India.
- Income from cultivating the land and selling the produce (with only the processes needed to make it marketable).
- Income from a farm-house used for agricultural purposes, subject to conditions.
- Not included: dairy, poultry, fisheries and the processed part of a product — these are business income.
Partial integration — how the rate is pushed up
When agricultural income exceeds ₹5,000 and other income exceeds the basic exemption limit, tax is worked out in two steps: (1) tax on other income + agricultural income; (2) tax on agricultural income + the basic exemption limit. Tax payable = (1) − (2). The farm income itself stays untaxed, but your other income moves into higher slabs.
Use our Agricultural Income Tax calculator to see the effect for your figures under both regimes.
Selling agricultural land
| Location of land | Treatment |
|---|---|
| Rural — outside the specified distance from a municipality | Not a capital asset — sale is not taxable |
| Within a municipality / cantonment of population ≥ 10,000 | Capital asset — capital gains apply |
| Within 2 km (pop. 10,000–1 lakh), 6 km (1–10 lakh) or 8 km (> 10 lakh) of municipal limits, measured aerially | Capital asset — capital gains apply |
Frequently asked questions
If total income other than agricultural income exceeds the basic exemption limit, yes — and agricultural income above ₹5,000 must be disclosed in the return.
Yes. Dairy, poultry and similar activities are business income, not agricultural income.
It depends on the distance from the municipal limits and the population band. Land within the specified distance is a capital asset; send us the location and we will check.
