Meaning of agricultural income:
According to section 2 (1A), “agricultural income” means – (a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes; (b) any income derived from such land by agricultural operations including processing of the agricultural produce raised or received as rent in kind so as to render if fit for the market, or sale of such produce; (c) Income attributable to a farm house subject to the condition that the building is situated on or in the immediate vicinity of the land situated in India (which is used for agricultural purposes) and is used as a dwelling house, store house or other out-building and the land is assessed to land revenue or a local rate or alternatively, the building is situated on or in the immediate vicinity of land (which is situated in India and used for agricultural purposes) which (through not assessed to land revenue or local rate) is situated outside the urban areas, i.e., any area which is comprised within the jurisdiction of a municipality or cantonment board having a population of 10,000 or more or in area within such notified distance [up to 8 km. vide Notification No. SO 10(E), dated January 6, 1994] from the local limits of such municipality or cantonment board. [However, income derived from such building or land arising from the use of such building or land for any purpose other than agriculture shall not be treated as agricultural income].
From the assessment year 2009-10, any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.
Exemptions – Agricultural income is exempt from tax under section 10(1). However, in few cases agricultural income is taken into consideration to compute tax on non-agricultural income.
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