Dairy income (Milk from Cow)is taxable. In State of Orissa v. Ram Chandra Choudhury (1962) 46 ITR 246 (Orissa) (HC) applying the ratio laid down by Supreme Court in CIT v. Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC) held that Dairy -farming will not be agricultural operation and income from Dairy farming will not be agricultural income.Answered by:Research TeamCategory:Income-TaxQuerist:KARAN SHAH
Does income from dairy farming constitutes agricultural income under income tax?
The income from agricultural income is exempt under section 2 (1) of Income tax act. But it is necessary to understand that whether income from dairy farming constitutes agricultural income or not. 1. There must be a land 2. The land is being used for agricultural operations. 3.
Is dairy farming profitable in India?
India does not tax agriculture, therefore, increasing profit margins are adding directly to the wealth of farmers and they have sizable income to deploy for business opportunities, one of them is Dairy Farming.
Can a farmer earn income from cow milk?
A Farmer earn income above 2.5 L from cow milk…Is it taxable Income or Not… Taxable. . The income from agricultural income is exempt under section 2 (1) of Income tax act. But it is necessary to understand that whether income from dairy farming constitutes agricultural income or not. 1. There must be a land 2.
Is agricultural income exempted from income tax in India?
Mr SINGH’s income tax liability is Rs 14,000 – Rs 9,000 = Rs 5,000. So, it is clear that even though agricultural income is exempted under IT act, in actual practice it is not the case. Also, if you are in say 20% tax bracket, addition of agricultural income may take you to 30% tax slab rate.
What is income earned from any of the under given three sources?
As per Income Tax Act income earned from any of the under given three sources meant Agricultural Income ;
What does "exempt" mean in agriculture?
means that income earned from agricultural operations is not taxed. The reason for exemption of
What is Pashudhan Praharee?
Pashudhan praharee is the mouthpiece of Indian Dairy & Poultry industry, dedicated to the animal health care & livestock development.Our mission is to strengthen the animal husbandry practices in India and transfer the technologies from Lab to Land.
What is the difference between Rule 8 and Rule 7?
manufacture of coffee and Rule 8 deals with Income from manufacture of tea. . Rule 7 deals
What happens if a landlord charges interest on arrears?
to pay arrears. If the landlord charges interest on such arrears, the income would not be
Is agricultural income exempt from the IT Act?
So, it is clear that even though agricultural income is exempted under IT act, in actual practice it is not the case. Also, if you are in say 20% tax bracket, addition of agricultural income may take you to 30% tax slab rate. So, agricultural income is considered for determining the applicable income tax slab rate.
Is timber considered agricultural income?
Exceptions: – If a person just sells processed produce without actually carrying out any agricultural or processing operations, the income would not be regarded as agricultural income. Likewise, in cases where the produce is subjected to substantial processing that changes the very character of the product (for instance, canning of fruits), the entire operations cannot be regarded as agricultural operations. The profit from the sale of such processed products would have to be apportioned between agricultural income and business income. Further, the income from trees that have been cut and sold as timber is not considered agricultural income since there is no active involvement in operations like cultivation and soil treatment.
How much green fodder is required per cow?
Also there is no way to maintain records of amount of fodder consumed as end product is milk, however any one would corroborate the fact that 30 kg green fodder is required per cow and that there is green fodder growing in 4 acres land parcel adjacent to the dairy farm. You can file your returns under Section 44AD.
What is the minimum percentage of profits for 44AD?
You can file your returns under Section 44AD. It is not mandatory to show 8 or 6% profits but the minimum percent is 8%. You can very well show a higher percent. If in your case you are not in a position to prove your expenses by maintaining all the requisite documents, you can file your return u/s 44AD and then show a higher percent i.e 20-25% as your profits.
Can you account for green fodder at market price?
I understand most of the queries have been answered. Regarding the green fodder, you cannot account for it at the market price, because it is notional. You can account for only actual expenses incurred at the price at which they were incurred.
Do they ask why you have a higher income?
No, they will not inquire as to why have you declared a higher income.
Do you need to keep records for a higher income?
No, records are not required to be maintained but you can willfully declare a higher income.
Can you show expense at market value?
Coming to the second question, you can’t show expense at the market value. You can only show expense to the extent cost incurred by you for growing green fodder.
Agriculture is considered the livelihood of the majority of Indians. Approximately 58% Indians are dependent on agriculture as their primary source of income.
Definition of Agricultural Income
According to Section 2 (1A) of the Income Tax Act, 1961, agricultural income means:
Is Agricultural Income Taxable in India?
According to Section 10 (1) of the Income Tax Act, 1961, agricultural income is exempted from taxation. The central government does not have the authority to levy tax on agricultural income.
Why the Government should tax Agricultural Income?
Taxation of agricultural income has always been a very sensitive issue and none of the governments have shown any interest in taking corrective measures even though the official reports have repeatedly expressed concerns over non-agriculturists abusing the exemption given to agriculturists.
As we can see, agricultural income is more of a political issue and where some say that there should be slabs of tax just as in the case of other sources of income, others say that the rich farmer should be taxed.
Why is income tax contentious?
Income Tax have various contentious issues despite being one of the oldest Law of the Land. On these issues assesse and revenue used to loggerhead each other on various form of Authorities. Taxation of AGRICULTURAL INOCME is also one of such contentious issue. One of the main reason for various dispute on Agriculture Income is attribute to the status of EXEMPT INCOME conferred by Income Tax Act vide section 10 (1) of the Act.
What is the object of audit under section 44AB?
It may be appreciated that the object of audit under section 44AB is only to assist the Assessing Officer in computing the total income of an assessee in accordance with different provisions of the Act. Therefore, even if the income of a person is below the taxable limit laid down in the relevant Finance Act of a particular year, he will have to get his accounts audited and to furnish such report under section 44AB, if his turnover in business exceed the prescribed limit.”
What is the significance of CIT v. Raja Benoy Kumar Sahas Roy?
Raja Benoy Kumar Sahas Roy (1957) 32 ITR 466 (SC). It is a landmark case for the understanding of agriculture under the Income Tax Act. It was an interesting case wherein assesse was growing tress on a forest land. Growing of trees was inter alia includes of cutting of tress and leaving the stumps to regrow. The Supreme court held such income as agriculture income and held as under:
What does "c" mean in a transaction?
c. In respect of transaction relating to one event or accession.
What is the provision of section 269ST?
2. Provision of section 269ST: As per provision of section 269ST of the Act, No person shall receive an amount or Rs Two lac or more from a person
What are the other provisions of the Income Tax Act?
Other Provisions under the Income Tax Act: 1. Provisions of Section 40A (3): As per rule 6DD (e)of the Income Tax Rule, Provision of section 40A (3) is not applicable if cash payment in excess of Rs 10,000/- is paid for purchase of agricultural produce to a farmer directly.
What is agricultural income?
The definition of ‘agricultural income’ under section 2 (1A) provides that the following shall constitute agricultural income: (i) any rent or revenue derived from land which is situated in India and is used for agricultural purposes [ Section 2 (1A) (a)]
Do you have to pay taxes on milk sales?
250000 for now but if your total income is below 300000 for this year and 500000 for next year then also you won’t be required to pay tax however you will have to file return of income if your total income is above 250000.
Is milk sales taxed?
YEs , the sale of milk is a normal business transaction and hence the net profit will be taxed. You need to pay tax as per your incom slab.
Is milk from a dairy farm taxable?
Income from a DAIRY FARM i.e. producing milk from cows/buffalo & selling it in any manner-raw milk or value added products is Taxable like any other income. It is not to be treated as Agriculture Income which is income from anything which is grown on land & hence not Taxed.
Do you have to declare business income?
Yes, Income tax is payable on such activity.You have to declare it as Business Income.
Is Agricultural Income Taxed In India?
The income obtained from agricultural land is nontaxable under Section 10 (1) of the Income Tax Act 1961.
What is section 2 of the Income Tax Act?
Section 2 (1A) of the Income tax Act details out the conditions wherein sources can be considered to be generating agricultural income. The section’s definitions basically point out the following as the sources for agricultural income –
What is agricultural income?
As per Section 2 (1A) in the ITA, agricultural income means any rent or revenue derived from land located in India, including rent on agricultural land and buildings, and is tax-exempt. Under contract farming, a farmer could undertake many of these operations and qualify for income tax exemption.
How long can losses be taken off against agricultural gains?
If an individual suffers from losses in agriculture then these losses can be taken off against the agricultural gains for the next 8 years.
Does agricultural land fall under ITR?
In case, the agricultural land does not come under the range of the aforementioned section then the individual or the owner of the land would need to do evaluate separately, just for the tax purpose. If the agricultural income falls under the aforementioned section, i.e. within INR 5000, then the person or the owner have to file the returns through ITR 1 , else ITR 2 to be used in which there is a separate column to declare the details of the agriculture income.
Do you have to pay income tax on agricultural income?
If an individual has agricultural income other than their other sources of income then you are liable to pay income tax on your other sources of income apart from agriculture income.
Should you aggregate agricultural income?
One should always remember to aggregate the agricultural income while calculating tax since that can allow one to avoid unnecessary extra taxes or interest on taxes.