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CA Intermediate · Taxation · Basic Concepts

Rohan, a resident individual, has the following receipts in tax year 2026-27: salary Rs 9,00,000 (taxable), agricultural income from land in Punjab Rs 2,00,000 (exempt), and interest on bank deposits Rs 40,000. In computing his total income, which statement is correct?

Rohan's gross total income includes only salary and interest, giving Rs 9,40,000 before deductions. Agricultural income is exempt and is excluded from total income. It is considered only for partial integration of tax rates in the old regime, not as part of total income.

  1. AAgricultural income of Rs 2,00,000 is added, so the total income is Rs 11,40,000
  2. BOnly Rs 9,40,000 is included in total income, before deductions, since agricultural income is exemptCorrect
  3. COnly salary of Rs 9,00,000 is included since interest is exempt
  4. DAgricultural income is added to compute rate of tax only, so total income is Rs 11,40,000

Explanation

Agricultural income is not charged to tax and is excluded from total income. Salary Rs 9,00,000 plus interest Rs 40,000 gives Rs 9,40,000 before deductions. Agricultural income is integrated only in the partial integration for individuals with non-agricultural income above the basic exemption limit under the old regime, and does not enter total income itself.

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