It is misconception and / or improper to say that "Agricultural Income" is Tax free.
1. To claim total tax exemption under the head "Agriculture Income",
a) THE PERSON HAS TO BE A "ANCESTRAL & CHRONIC FARMER"
" A N D "
b) most importantly he " MUST OWN " agricultural land in his own name.
c) An I.T.O. has discretionary powers to allow exemption under "agricultural income" and can disallow any income which is not proportinate vis-a-vis to the Land Holding area and the agriculture Income capacity claimed thereon.
d) If a person cannot produce "7 X 12" land record extract in his own name, then all income claimed as "agriculture income" will be disallowed and will be taxed as regular income-from-other-sources"
e) A person owning "non-agriculture land or say NA land" BUT doing farming or agriculture work and claiming agriculture income IS ALSO NOT ALLOWED TO CLAIM TAX EXEMPTION under agriculture head.
2. If a person in not a "Ancestral Farmer", and does not actually "O W N" agricultural land in his own name, THEN
a) HE CANNOT CLAIM "TAX EXEMPTION" under the head of "Agriculture Income",
b) he cultivates & earns from somebody elses land.
c) he is not entitled to any subsidy or benefits announced by the Govt.
d) Non-Farmer category taking over "agriculture land" "ON LEASE", are "not entitled" to any tax exemption under the agriculture income head.
e) A "actual" farmer BUT a non-land owner (who might have sold off his entire land holding) can claim "agriculture income" by farming on another farmers land, BUT ONLY FOR A PERIOD OF 12 YEARS, after that he loses his "farmer" status, unless he again buys "agricultural land" in his own name, within the period.
3. For e.g.
a) There are Corporates who own "agricultural land".
b) A corporate cannot be classified as a "Farmer", since it is a non-human being.
c) All "agricultural income" WHATSOEVER, from the Corporate owned land, is taxed as "Business Income" and not exempted as "agriculture income".
d) Corporate Land owners are not entitled to any subsidy or benefits announced by the Govt.
e) "Agricultural Income" cannot be claimed if generated out of "NA" land.
4. There is ABSOLUTELY "no bar" on any Govt. servant or Public servant or HIV+ Minister or beggar or leper to own "agriculture land" and do ADDITIONAL agriculture work and earn income out of it, subject to above parameters.
(AS IT IS, 90% OF OUR POLITICAL LEADERS ARE FARMERS)
5. OF COURSE, to the interested people, there are official ways or becoming a "professional farmer" and purchase "agriculture land" (even in Maharashtra) and do farming AND "ONLY" THEN claim tax exemption under the agriculture income head.
Keep Smiling .... Hemant Agarwal