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

Mr. Sanjay Verma, a resident individual, receives the following in a year: salary Rs 9,00,000 (taxable), agricultural income from land in Punjab Rs 2,00,000 and long-term capital gain on listed equity shares Rs 40,000. Which of these is exempt from income tax and excluded from his total income?

The agricultural income of Rs 2,00,000 from land in India is generally exempt from tax and excluded from total income. Salary is taxable, and long-term gains on listed equity are taxable above the prescribed exemption limit, so they are not exempt in all cases.

  1. AAgricultural income of Rs 2,00,000 from land in India, generallyCorrect
  2. BSalary of Rs 9,00,000
  3. CLong-term capital gain of Rs 40,000 on equity shares, in all cases
  4. DNone of the three, since all are taxable

Explanation

Agricultural income from land situated in India is exempt under the Act, subject to its being considered for rate purposes in specified cases. Salary is taxable under the head Salaries. Long-term capital gain on listed equity is taxable beyond the exemption limit, so it is not exempt in all cases.

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