Agricultural income from ancestral land: How HUF and joint ownership affect your tax

Agricultural income is generally exempt from income tax in India, but that does not always mean it can be left out of your ITR. The tax treatment can differ depending on whether the income is received as a distribution from an HUF or is your own share from jointly owned agricultural property. Here is what taxpayers need to know about disclosure and its impact on their tax liability.

Today's Q&A explains such details in response to a query by a reader.

**Question: I am a trader having taxable income of around ₹15 lakhs I have also received ₹2 lakh as my share of agricultural income from ancestral agricultural land. Do I have to disclose this in my ITR? Will it enhance my overall tax liability? **

Since this is an exempt income, you do not have to include this in your overall income. Though this is not taxable, you still have to disclose the same in the Schedule EI (exempt income) of ITR.

Even though the agricultural income is fully exempt under Section 10(1), it is required to be included in your total income for rate purposes.

This inclusion of agricultural income with your regular income will effectively increase the effective average rate of tax applicable on your regular taxable income of ₹15 lakh. In both the situations the same should be disclosed in the schedule EI (Exempt Income).