• Rental agriculture income

Hello ma'am/sir,

I had 12-acre agriculture land which I had given on rent to someone for agriculture purpose. 

rend period is may 2017 to April 2018.

the rent is 60 thousand per acre per annum to be paid in advance.

the tenant had given me 6 lakh through account transfer and 1.2 lakh in cash in may 2017

if I file ITR as agriculture income what proofs should I have so that if some inquiry or objection from the department is there I can answer it?

presently its a verbal agreement between me and tenant. In Future shall this rental agreement is on stamp paper for record purpose is required or not.

please also tell this rental income will be treated as exempted agriculture income or not?
Asked 4 months ago in Income Tax from karnal, Haryana

Dear Sir,

Income recevied from Agriculture Land is considered under Agricultural Income, Agriculture income is exempt under the Indian Income Tax Act. This means that income earned from agricultural operations is not taxed .

The exemption clause is mentioned under Section 10 (1) of the Income Tax Act of India.

Payal Chhajed
CA, Mumbai
1109 Answers
8 Consultations

4.8 on 5.0

As per section 2 sub section 1A agricultural income includes income from rent by letting out agricultural land used for agricultural purpose.

Therefore your income is exempt as agricultural income.

However you will have to enter into an rent agreement which would clearly mention that the land is agricultural land used for agricultural purpose as income tax officer won't accept verbal agreement.

Also if your tenant is doing agricultural activities i.e. growing some food grains then I guess gram panchayat or local mandi also issues a form where they mention the crop grown and the land on which it is grown details rate of the crop etc, you must also keep that as a proof.

This two things would be great to prove your agricultural income.

So just fulfill above requirements and relax.

Hope this helps.

If you need any other help just write to us.

Do rate the answer if you like it.

Naman Maloo
CA, Jaipur
574 Answers
5 Consultations

5.0 on 5.0

Thanks for your rating kindly also provide your feedback for providing 3/5 so that I can improve my reply next time. I guess I provided you the right consultancy.

Thank you.

Naman Maloo
CA, Jaipur
574 Answers
5 Consultations

5.0 on 5.0

Sir, first of all your agricultural income is totally exempt provided agricultural activity mush have been done on that, and this will be proved by updating you land record with patwari record of your area and the same is also sufficient for proving your agricultural income....and for safety you can also have an affidavit stating declaration by the concerned persond regarding paying you rent...

Thank you

Shubham Parakh
CA, Raipur
5 Answers

Not rated

Hi,

Rent from agriculture land is exempted as it is given for agriculture purpose.

So if there is any enquiry or notice from Income Tax then you have to prove that it was for agriculture purpose and for that it is better to have agreement on stamp paper and purpose of renting shall be specified in agreement.

Purpose species in agreement is enough still if you can collect additional evidence like copy of Sale Bills of tenant and other related evidence that tenant is actually doing agriculture activity.

Narendra Sonagra
CA, Ahmedabad
29 Answers

Not rated

Hi,

Yes, you should enter into an rental agreement with the other party at the earliest. You should also mention in the rental agreement that this property shall be used for the purpose of agriculture.

This rental income can be considered as agricultural income if the other party is using the land for agricultural activities.

Abhishek Dugar
CA, Mumbai
3576 Answers
162 Consultations

5.0 on 5.0

Hi

Since you have given the land for agricultural purposes, any income derived from it will be taxfree.

My suggestion is to get into a rental agreement and avoid accepting any cash and accept all rentals through cheque/online account transfer.

Hope that resolves your query.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1428 Answers
19 Consultations

4.8 on 5.0

Hi

This will be exempt income; not chargeable to tax.

#Get a rent agreement executed.

#Receive entire rent in bank account in future.

#Show such income as Exempt income in ITR.

Lakshita Bhandari
CA, Mumbai
2254 Answers
81 Consultations

5.0 on 5.0

Hi,

- Rental income from agricultural land will be exempt only if the land will be used wholly for agricultural purpose by the tenant. Please specify the nature of agriculture activity tenant is doing on it.

- Avoid cash transactions and receive all rental through banking channels.

- Most important, there should an written agreement notarized by the authority and the nature of agriculture activity should be clearly mentioned on it.

- Agriculture income more than Rs.5,000 is taking into account for rate purpose. If you have any other income, please let me know.

- Disclose agriculture income under exempt income schedule.

Thanks

Vivek Kumar Arora
CA, Delhi
1724 Answers
52 Consultations

5.0 on 5.0

Hello sir, ma'am

according to income tax your agriculture income is exempt. But i need to know wether u have any other source of income?? and u required proof if there is objection recarding the same.

Poorvi Jain
CA, Indore
8 Answers

Not rated

First thing income will be exempt if only tenant is doing agricultural activity on land.

Second thing you should get rental agreement on stamp paper.

Bharat Poplani
CA, Zirakpur
56 Answers

4.9 on 5.0

Hi

It will be tax free income.You should have written agreement duly notarized to protect yourself from future litigation.

Swati Agrawal
CA, Indore
698 Answers
1 Consultation

5.0 on 5.0

Respected sir,

Agricultural income earned by a taxpayer in India is exempt under Section 10(1).Agricultural income generally means

Any rent or revenue derived from land which is situated in India and is used for agricultural purposes.

since your land is used for agriculture purposes hence rent derived from it will be considerd as agriculture income and hence exempted from income tax.

HOWEVER

If you have any other income beside agriculture income exceeding basic exemption limit (250000/300000/500000) then Agricultural income is considered for rate purposes while computing the income tax liability.

Shiv Kumar Agarwal
CA, Delhi
290 Answers
61 Consultations

5.0 on 5.0

Ask a Chartered Accountant

Get tax answers from top-rated CAs in 1 hour. It's quick, easy, and anonymous!
  Ask a CA