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

Mr. Raman Iyer, a resident individual, receives the following in a year: salary Rs 12,00,000, interest on savings bank account Rs 8,000, and agricultural income from land in Tamil Nadu Rs 3,00,000. Which statement correctly describes how these are treated under the Act?

Savings bank interest is taxed under Income from Other Sources, while agricultural income from land in India is exempt from tax. Salary is taxed under the head Salaries. Residence does not make all income exempt, so only the agricultural income is exempt here.

  1. AAgricultural income is taxable under Income from Other Sources
  2. BSalary is taxable as Income from House Property
  3. CInterest on savings account is taxable under Income from Other Sources, and agricultural income from Indian land is exemptCorrect
  4. DAll three are exempt because he is a resident

Explanation

Savings bank interest is classified under Income from Other Sources (subject to any deduction available). Agricultural income from land in India is exempt from tax, though it may be considered for rate purposes in certain cases. Salary is under the head Salaries, not house property.

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