Hello Sir,
Agricultural income earned by a taxpayer in India is exempt under Section 10(1) of the Income Tax Act, 1961
As per section 2(1A), agricultural income generally means (a) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes. (b) Any income derived from such land by agriculture operations including processing of agricultural produce so as to render it fit for the market or sale of such produce
If agricultural operations are carried out on land, either urban or rural, the income derived from sale of such agricultural produce shall be treated as agricultural income and will be exempt from tax.
Finance Act, 1992 made suitable amendments to the Wealth Tax Act and sec. 2(ea)(v)(b) defines “urban land”. But it does not clearly explain the status of agricultural lands situated in urban areas. The said document which showed the Tax Obligation under Wealth Tax Act, clearly stated by a note “Agricultural land situated in urban area is not liable to wealth-tax”.
Agricultural income is exempt under Section 10(1) of the Act so long as the income is derived from agricultural land situated in India. This income is, however, included merely for rate purposes and rebate is allowed on the same in accordance with the Finance Act. The inclusion of Agricultural income for rate purpose is only required if total income( excluding agricultural income) of an individual exceeds Rs. 2,50,000/- (assessee being aged less than 60 years of age).