Question

earned agricultural 0.2 (Dec 2017) Mr. Ramesh a resident of India, ages 62 years earned agr income of Rs. 4,00,000 during the previous year 2018-19. Compute liability assuming that he has non-agricultural income of Rs. 5,00,000.

Answer 1

According to Income Tax Act1961, Agricultural income is exempt under Sec 10(1).

However, when the assessee has both agricultural and non agricultural income, in order to determine the tax liabiltiy of the assessee, we need to add the agricultural income for rate purposes which is called partial integration of agricultural income.

Herein, we firstly add the total income which is Rs. 5,00,000 with the exempted income of Rs. 4,00,000 and then calculate the tax liability.

The assesee is a senior citizen(62 years), his tax slabs would be as under:

upto 3,00,000 - nil

3,00,001-5,00,000- 5%

5,00,001-10,00,000-20%

this sums upto 90,000

further, we deduct agricultural income + maximum exemption limit and calculate the tax liability:

this results to 50,000

we deduct 90,000 from 50,000 which results to 40,000 and then we add health and education cess @4%.

the net tax liabilty of the assessee is 41,600.