Calculation of tax on agriculture income as per Income Tax Act 1961

We all know that under Income Tax Act 1961 agriculture income is exempt. Though if below two conditions are cumulatively satisfied then it is required to be included in computation of tax liability,we have detailed Calculation of tax on agriculture income as per Income Tax Act 1961:

Calculation of tax on agriculture income as per Income Tax Act 1961
Calculation of tax on agriculture income as per Income Tax Act 1961
  • During previous year net agricultural income exceeds Rs.5000 and
  • Excluding agriculture income total income income exceeds Rs.2,50,000.

In case assessee who is individual and age if between 60 to 79 years hence in condition to above amount changes to Rs.3,00,000 and for age 80 and above amount changes to Rs.5,00,000.

Following are the steps for Calculation of tax on agriculture income as per Income Tax Act 1961.

If above mentioned conditions are satisfied we can calculate tax as below:

  • If assessee has agricultural income of Rs.2,00,000 and other income excluding agriculture income of Rs.6,50,000,then it is required to calculate tax on total income of Rs.8,50,000 at first.Hence tax on total income of Rs.8,50,000 will amount to Rs.82,500 for individual who is below age of 60 for previous financial year 2019-20.
  • Now tax should be calculated on basic tax slab benefit and sum of agricultural income.That is sum of Rs.2,50,000(Basic slab benefit for individual whose age is less than 60 for previous financial year) and Rs.2,00,000(Agriculture income),hence tax on Rs.4,50,000 will be Rs.10,000.
  • Now Rs.10,000 should be deducted from Rs.82,500 to arrive at tax liability excluding cess or any other deduction.Hence net tax liability is Rs.72,500.
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