13 Apr
NOW A STRICT EXAMINATION OF AGRICULTURAL INCOME IN INCOME TAX
NOW A STRICT EXAMINATION OF AGRICULTURAL INCOME
IN INCOME TAX
Taxpayers who
show an agricultural income of more than Rs 10 lakh while filing their income
tax will now have to be more careful. The Income Tax Department is now keeping
a close eye on income earners who save tax by showing farm income.
So the
information given below is useful for those who show an agricultural income in
the income tax filing
What is the report on
agricultural income recently submitted by the CAG (Comptroller and Auditor
General of India)?
The CAG
(Comptroller and Auditor General of India) has prepared a report on assessments
relating to agricultural income which was presented in the 49th report of the
Public Accounts Committee which clearly stated that for rich farmers whose
agricultural income exceeds Rs.10 lacs the investigation will have to be dealt
with.
What is agricultural
income?
The general
meaning of agricultural income is:
(a) Any rent
or revenue derived from land situated in India and used for agricultural
purposes.
(b) From such
land any product suitable for market or sale of such products is obtained by
processing agricultural products.
(c) Any income
of a farm house subject to the satisfaction of certain conditions specified in
this regard in section 2 (1A).
(d) Seedlings
grown in the nursery or any income from seedlings shall be considered
agricultural income.
Also, Section
10 (1) of the Income-tax Act exempts agricultural income from tax.
If he/she is earning
income from agriculture then what should be taken care of?
The income
earned by the taxpayer is deductible, hence the documents supporting the
taxpayer's expenses incurred for obtaining farm income, receipts for the sale
of sold crop, documents relating to ownership/rights on farmland, cash book
and/or bank statement of the taxpayer should be properly maintained. Receipts
on account of sale of agricultural products, showing account bills and
receipts.
What special points have
the Public Accounts Committee underlined in its report?
The department
has developed computer-aided scrutiny selection (CASS) software to select
scrutiny cases. CASS is a centralized system for the selection of scrutiny
cases and includes special conditions for the selection of cases with more than
one threshold (i.e. Rs. 10 lakhs) of agricultural income.
According to
the parliamentary committee, the finance ministry should develop its own
mechanism for direct scrutiny of tax-free claims when agricultural revenue
exceeds Rs 10 lakh.
What can a taxpayer learn
from this?
The government
wants to state that if the taxpayer's agricultural income is more than Rs 10
lakh, he/she should take special care to keep the books of account and ensure
that the income disclosed in the income tax return is accurate and avoid the
problems during scrutiny.
Regards
Santosh Patil
ICA & MBA
9769201316
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