Agriculture revenue: Understand the definition, kinds, and taxation of agricultural revenue

 Agriculture revenue: Understand the definition, kinds, and taxation of agricultural revenue

States vary in their approaches to agriculture revenue. Revenue from agriculture may only be taxed by the state government. Any revenue from agriculture cannot be taxed by the federal government. While some agricultural revenue is taxed, the majority is not.

A tax exemption is provided on agricultural income under the Income Tax Act of 1961. Dairy, live stock, and poultry farming are not, however, regarded as sources of agricultural revenue. In this case, taxes are imposed on certain kinds of activity. States vary in their approaches to agriculture revenue. Revenue from agriculture may only be taxed by the state government. Any revenue from agriculture cannot be taxed by the federal government. While some agricultural revenue is taxed, the majority is not.

What is revenue from agriculture?

Revenue from farming is referred to as agricultural revenue if it is conducted on agricultural land. When land is utilized for agriculture, it is considered agricultural revenue under Section 21A of the revenue Tax Act. Rent received from a structure constructed on a farm is also considered agricultural revenue. But in order to do this, the structure must solely be used for agricultural purposes. If the structure isn't being utilized for agricultural activities, its revenue isn't regarded as agricultural revenue.

Agricultural revenue is another term for money received from the production of agricultural products. Agricultural products need to be processed before they can be sold; they cannot be sold on the market directly. For instance, oats need processing in order to remove their husk before they can be sold straight on the market. The money received by cultivating or marketing agricultural products is referred to as agricultural income, just as the money received from producing tomatoes is. Agribusiness revenue includes money from the sale of agricultural land. The money earned from any agricultural land that the government purchases is considered agricultural revenue.

What kind of money isn't regarded as coming from agriculture?

Not every state taxes the revenue from agriculture. Only a small number of states tax revenue from agriculture as well. Assam, Odisha, and West Bengal are the states that have taxation laws. States also vary in the requirements for enforcing taxes. Wheat, rice, vegetables, and the like are exempt from taxes; nevertheless, in some areas, horticulture and plantations are subject to taxes because they are regarded as commercial crops. The first thing you should do if your agricultural revenue is poor is find out how your state taxes agricultural income. If you are required to pay taxes on your agricultural income, then make the necessary payments.

A certain amount of some agricultural revenue is subject to taxation, with the remaining amount being exempt. This is the case, for instance, while growing rubber, tea, and coffee. For instance, in the case of tea, the overall agricultural revenue is tax-exempt, with the remaining 60% being taxable. You must pay tax on this based on your tax slab.

How should an agricultural income ITR be filed?

The Income Tax Act does not impose taxes on agricultural income; nonetheless, you still need to submit an income tax return. Your earnings are not subject to taxation or become taxable only because you filed an income tax return. This regulation was created only with the need for openness and proof of your agricultural earnings in mind. You may complete out Form ITR-1 if you earn up to Rs 5,000 from agriculture. Conversely, you must complete Schedule E1 and the ITR-2 form if your agricultural revenue exceeds Rs 5,000.