Agricultural income Definitions in India

Agricultural income

Agricultural income- Under article 366(1) of the Constitution of India 1950

366. In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say—

(1) ” agricultural income ” means agricultural income as defined for the purposes of the enactments relating to Indian income-tax;

Agricultural income Under Section 2(1A) of Income Tax Act 1961

Section 2(1A) :

⁴[(1A)]    ⁶“agricultural income”⁷ means⁸—

⁹[(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—

(i)           agriculture; or

(ii)          the performance by a cultivator or receiver of rent-in-kind of any process ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce raised or received by him fit to be taken to market; or

(iii)         the sale by a cultivator or receiver of rent-in-kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii) of this sub-clause ;

(c)          any income derived from any building owned and occupied by the receiver of the rent or revenue of any such land, or occupied by the cultivator or the receiver of rent-in-kind, of any land with respect to which, or the produce of which, any process mentioned in paragraphs (ii) and (iii) of sub-clause (b) is carried on :

⁹[Provided that—

(i)           the building is on or in the immediate vicinity of the land, and is a building which the receiver of the rent or revenue or the cultivator, or the receiver of rent-in-kind, by reason of his connection with the land, requires as a dwelling house, or as a store-house, or other out-building, and

(ii)          the land is either assessed to land revenue in India or is subject to a local rate assessed and collected by officers of the Government as such or where the land is not so assessed to land revenue or subject to a local rate, it is not situated—

(A)          in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee or by any other name) or a cantonment board and which has a population of not less than ten thousand ¹¹[***]; or

¹²[(B)      in any area within the distance, measured aerially,—

(I)           not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten thousand but not exceeding one lakh; or

(III)        not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than one lakh but not exceeding ten lakh; or

(III)        not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (A) and which has a population of more than ten lakh.

               ^13-14[¹⁵[Explanation 1.]—For the removal of doubts, it is hereby declared that revenue derived from land shall not include and shall be deemed never to have included any income arising from the transfer of any land referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of this section.]

¹⁶[Explanation 2.—For the removal of doubts, it is hereby declared that income derived from any building or land referred to in sub-clause (c) arising from the use of such building or land for any purpose (including letting for residential purpose or for the purpose of any business or profession) other than agriculture falling under sub-clause (a) or sub-clause (b) shall not be agricultural income.]

¹⁷[Explanation 3.—For the purposes of this clause, any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.]

¹⁸[Explanation 4.—For the purposes of clause (ii) of the proviso to sub-clause (c), “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;]

Agricultural and agriculturist Under Section 2(7) of Revised Model GST Law

(7) “agriculture” with all its grammatical variations and cognate expressions, includes floriculture, horticulture, sericulture, the raising of crops, grass or garden produce and also grazing, but does not include dairy farming, poultry farming, stock breeding, the mere cutting of wood or grass, gathering of fruit, raising of man-made forest or rearing of seedlings or plants;

Explanation.– For the purpose of this clause, the expression ‘forest’ means the forest to which the Indian Forest Act, 1927 (XVI of 1927) applies

(8) “agriculturist” means a person who cultivates land personally, for the purpose of agriculture;

4. Renumbered as clause (1A) by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989.

See rules 7 (Income which is partially agricultural and partially from business), 8 (Income from manufacture of tea), 7A (Income from manufacture of rubber) and 7B (Income from manufacture of rubber).

7. The Finance Act, 1973 introduced for the first time a scheme of partially integrated taxation of non-agricultural income with incomes derived from agriculture for the purposes of determining the rate of income-tax that will apply to certain non-corporate assessees. The scheme is since continued by the Annual Finance Acts. The provisions applicable for the assessment year 2016-17 are contained in section 2(2)/2(13)(c) and Part IV of the First Schedule to the Finance Act, 2016.

8. See also Circular No. 310, dated 29-7-1981 (Income from Tea) and Circular No. 17/2015, dated 6-10-2015 (Measurement of distance for purpose of section 2(1A)/2(14)(iii)(b) for period prior to assessment year 2014-15).