When agriculture income is taxable?

[ramesh bohra]

agriculture income if we have agri. land and we growing crops and sell as following way then income is exempted or not 1. we sell agri. crop in indian market 2 we export agri crop in same raw stage 3 we process some chemical for preserve crop we export it it will exmpt or not 4 we have crop and we make juice and then export it then what will happen

[Surender Gupta]

Making Juice or processing the crop otherwise alterer the nature of agriculture produce. Sale of product after processing is resulting into profit (or loss) from agriculture as well as business activity. For this purpose you may refer to rule 7, 7A, 7B or 8 of the Income Tax Rules, 1962. Export of the goods obtained after processing of crop or sale in domestic market is irrelevant for the purpose of determining the nature of income.

[DEV KUMAR KOTHARI]

I agree with reply of Mr. Surendra Gupta. In hands of land onwer agricultural income,a s defined in IT ACT will be exempt. In agricultural produce is sold after applying minimum processes which are required to renderr theproduce to be taken to market, it will result into agricultural income. In case more processes are applied then agricultural and business income will have to be determined as per applicable Rules. Depending on situation of factory, products and processes employed, time of installation of facilities etc. there may be some relief applicable under Chapter III and VIA which need to be checked. Check, whether there is any agricultural income tax in the state where agricultural land is situated.Agricultural income tax is imposed by the State Government. For detailed discussion better you consult your tax consultants.

AI Summary

Processing of agricultural produce alters its nature, potentially creating business income rather than exempt agricultural income.
Receipts from sale of produce after only minimal processes required to bring crops to market are exempt agricultural income in the hands of the landowner; where processing materially alters the produce (for example producing juice), the proceeds will include both agricultural and business income and must be classified and apportioned under the Income Tax Rules. Export or domestic sale is irrelevant to this classification. State agricultural income tax and other tax relief provisions may also affect the tax treatment depending on factual circumstances.