ZenIT || How to Calculate Tax on Agriculture Income

Calculating Tax on Agriculture Income

Take the sum of the agricultural income and non-agricultural income. The Tax (A) should be computed on this amount.           

Example:

The base tax slab varies according to changes in the Income Tax guidelines.

Add the base tax slab to the agricultural income, then compute another tax (Tax B) on this total.

Deduct (B) from (A) to find the Agricultural Income Tax liability. Agriculture Tax = (A) - (B).

Any available rebate, applicable surcharge, and education cess are added to the final taxable amount.

Let's consider an Individual Assessee with a Total income of Rs 422,700 (excluding Agricultural income) and a Net Agricultural income of Rs 185,000. According to this step, Tax shall be computed on Rs 422,700 + Rs 185,000 = Rs 607,700. Thus, the income Tax amount as per this step shall be Rs 607,700.

Tax at the normal rate

607700 (Total income) – less basic exemption limit Rs (250000)

357700 tax 5% (5% of Rs 5,00,000 less Rs 2,50,000) = 12500

107700   20% (20% of Rs 107700) = 21540

Total Tax = 34040

Tax on agriculture income:

185000 ( 5% of Rs 185000) = 9250

Total tax = 34040

Tax rebate on agriculture income = 9250

Tax rebate 87a = 12500

Tax payable =  12290

Hope this Helps. 

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