Tax on agricultural income

Hi Kamalanathan,

According to the Income Tax Act of India, Section 194-I deals with the TDS on rent. While rent for land used exclusively for agricultural purposes is generally exempt from income tax, the nature of the use in your case—poultry breeding-not qualify as agricultural income. Agricultural income typically includes income derived from land by agricultural operations, such as the cultivation of crops or the performance of any process ordinarily employed by a cultivator to render the produce marketable.

Poultry farming, although related to agriculture, is considered as commercial activity rather than a purely agricultural one. Hence, the rent received from leasing out land for poultry breeding purposes could be subject to taxation, which is why your tenant is deducting TDS under Section 194-I.

- It is a rental income and not an agriculture income therefore would be liable to income tax (TDS u/s 194-I @10% would be deducted if the amount of rent exceeds Rs. 2.40 lacs p.a.) 

- GST@18% would also be payable if you have obtained GST registration on same PAN on which you are receiving rental income or turnover exceeds the threshold limit

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Dear sir,

As per section 2 of Income tax act, agriculture income means (a) any rent or revenue derived from land which is situated in India and is used for agricultural purposes;

Now income tax act does not define agriculture purpose. However, as per some prior case laws it can be said that agricultural income means income derived through cultivation on land and accordingly breeding which is not related to land should not be covered under agricultural income. Even if you are owning live stock and breeding them same is not considered as agricultural income and hence any rental income because of use of land for breeding would not be considered as agricultural income in my humble understanding.

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Thank you.