Agricultural income in India is different from other income and is kept exempted from taxation under the Income Tax Act. Agricultural income cannot be included in the total computation of income for tax purposes.

However, the income tax act indirectly taxes the agricultural income using a method called partial integration of agricultural income with non-agricultural income. This method taxes the non-agricultural income at higher tax rates.

There is complete rebate on agriculture income in these cases:-

• If your total agricultural income is less than Rs. 5,000 p.a.;
• If the income from agricultural land is the only source of income, i.e., no other income;
  Where you have both agricultural income and other income and if the total income excluding such agricultural income is less than the basic exemption limit.
• But if your agricultural income exceeds Rs. 5,000 and you have other sources of income, then the tax liability for that year is to be calculated as follows and applicable to Individuals, HUFs, AOPBOIs, and Artificial Judicial Persons.