In India, agriculture is claimed to be the most common occupation. For India’s enormous rural population, it is frequently their only source of income. For its fundamental food requirements, the country is entirely reliant on agriculture. The government has a variety of programs, laws, and other measures in place to encourage growth in this industry, one of which is an income tax exemption.
When it comes to the tax of farming revenue, it is exempt from income tax may be all we need to know, but there is more to it.
Why is farming income in India tax-free and absolute?
Section 10(1) of the Income Tax Act of 1961 exempts agricultural income obtained by a taxpayer in India. More shocking is that this ostensibly agricultural revenue is entirely tax-free. One can earn an endless amount of money through agriculture without paying a single penny in income tax.
While income tax is imposed on all sorts of income from all individuals, it is a million-dollar question why the government does not charge any income tax on agricultural revenue. Some people believe that our government is highly thoughtful and sympathetic to the farmer’s community and that it does not wish to impose income taxes on farmers’ agricultural revenue. This, however, is false. If the government wanted to provide relief to farmers by not subjecting them to income tax, it could have established a tax-free agricultural income threshold. Suppose a particular form of income is rendered entirely tax-free without any limits. In that case, the farmers are not the true benefactors of this tax exemption. There is a giant conspiracy to provide this unlimited exemption by including a clause in the Income Tax Act.
You’ll be astonished to learn that no political party opposes bringing agricultural income into the tax system regardless of philosophy. You must have noticed that when bills relating to salary and allowance increases are submitted in the parliament or assembly, they are quickly passed unanimously, with all political parties enthusiastically supporting them. The total tax exemption of agricultural income follows the same approach. Because all politicians (regardless of political philosophy) are the true benefactors of this infinite tax exemption, they are gleefully taking use of it. For the past 70 years, agricultural income has transformed black money into white money. Most politicians and others who benefit from their patronage are misusing the “agricultural income” path to convert their black money into white money.
The Revenue Tax Department and its officers are fully aware of the misapplication of tax exemptions on agricultural income. Still, they prefer to remain mute on this “tax anarchy for political reasons.” Suppose a genuine officer tries to dissect the tax immunity on agricultural income. In that case, the whole political system scrutinizes him, and the officer is hounded, suspended, and even fired from the service.
Taxation of agricultural income
Agricultural revenue is not subject to income tax. On the other hand, the Income-tax Act has established a way for indirectly taxing such income. The partial integration of agricultural and non-agricultural income is the name for this strategy or notion. Its goal is to tax non-agricultural income at a greater rate. When the following requirements are met, this approach can be used: Applicability:
- Individuals, AOPs, HUFs, Bois, and artificial juridical persons must all use this approach to determine their taxable income. As a result, this strategy does not apply to companies, firms/LLPs, cooperative societies, or local governments.
- During the year, net agricultural income exceeds Rs. 5,000; and non-agricultural income exceeds Rs.
- Individuals under the age of 60 and all other eligible applicants must have a net worth of more than Rs. 2,50,000.
- Individuals aged 60 to 80 years old can earn more than Rs. 3,00,000.
- For people over the age of 80, more than Rs. 5,00,000 is required.
Non-agricultural earnings should be greater than the maximum tax exemption (as per the slab rates).