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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Concepts in Taxation

Caselet: Mr. Arjun Shetty, aged 35, is a resident individual with a total income of Rs 10,00,000 from salary. His adviser mentions the term 'agricultural income'. Which statement about agricultural income from land in India is correct?

Agricultural income from land in India is exempt from income tax, though for certain individuals it is included to determine the tax rate on non-agricultural income under partial integration. It is not business income and not taxed at a flat rate.

  1. AIt is exempt from income tax but may be considered for rate purposes in certain casesCorrect
  2. BIt is fully taxable as business income
  3. CIt is taxable only if the land is in an urban area
  4. DIt is taxed at a flat 30% rate

Explanation

Agricultural income from land in India is exempt from tax. However, for a non-company assessee with non-agricultural income above the basic exemption and agricultural income above Rs 5,000, it is added for rate purposes (partial integration). So the exempt-but-considered-for-rate statement is correct.

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