AGRICULTURAL INCOME AND TAX LIABILITY
1. Mr X furnishes the return of income for the financial year 2007-2008. His total income (non-agricultural) is Rs
12,10,000 and net agricultural income is Rs 1,90,000. He is entitled to a rebate of Rs 4,000 under Sec. 88E.
Compute the amount of tax payable by Mr X for the assessment year 2008-2009.
Solution: Computation of tax for the assessment year 2008-2009
(a) Income tax on the aggregate of non-agricultural income and net agricultural income (i.e. Rs 14,00,000) as if it
is the total income.
On the first
On the next
On the next
On the balance
1,10,000
40,00
1,00,00
11,50,000
Nil
10%
20%
30%
Nil
4,000
20,000
3,45,000
14,00,000 3,69,000
(b) Income tax on net agricultural income plus the basic exemption limit i.e. Rs 1,10,000 (i.e. Rs 3,00,000) as if
it is the total income.
On the first
On the next
On the next
On the balance
1,10,000
40,000
1,00,000
50,000
Nil
10%
20%
30%
Nil
4,000
20,000
15,000
3,00,000 39,000
(c) Gross income tax: (a) – (b): Rs 3,69,000 - Rs 39,000 =
(d) Less: Rebate of tax (Sec. 88E) =
Net income tax
(e) Add: (i) Surcharge on income tax @ 10%
(ii) Education cess @ 2% on the aggregate of income +
surcharge
(iii) SHEC @ 1%
Tax payable
Tax payable to be rounded off to the nearest multiple of Rs. 10 (Sec. 288B)
3,30,000
4,000
3,26,000
32,600
3,58,600
7,172
3,586
3,69,358
3,69,360
2. Mr. Gangaprasad, resident in India, turns out 65 years of age on 31 March 2008. He furnishes the following
particulars of his income for the previous year 2007-2008:
Particulars Rs
(i) Rent from agriculture land, located in a village of Jharkhand
district
(ii) Rent from building, located in the vicinity of agriculture land,
which is assessed to land to revenue and the tenant, cultivating
the agricultural land, occupies it for his dwelling and storing
purposes
(iii) Income from business
(iv) Long-term capital gain
2,50,000
60,000
3,00,000
1,00,000
He maintains a motor car which is used 70% for business purpose, 10% for collecting rent from building and 20%
for collecting rent from agriculture land. He has incurred and expenditure of Rs.1,00,000 by way of petrol, repair
and salary of the driver. He also claims depreciation on the written down value of the motor car on 1.4.2007. Rs
2,00,000 @ 15%. He has paid Rs 2000 as local tax to the village panchayat in respect of the building. He also
paid Rs 30,000 land revenue to the Government on account of agriculture land.
http://success-gurus.blogspot.com
Determine his total income and tax liability in the following cases:
(i) Agriculture produce goes under marketing process to fetch better rates in the market,
(ii) Agriculture produce goes under marketing process to make it saleable in the local market.
Computation of Total Income for the assessment year 2008-2009
(i) Income from house property:
Gross annual value based on rent
Less : Local tax to village panchayat : No deduction is allowed as it is not a
municipal tax
Net annual value
Less: (i) Statutory deduction @ 30% of NAV
Income from House Property
Income from house property to be treated as agriculture income provided the
agriculture produce is not subjected to marketing produce to fetch better rates
[Sec. 2(1A)(c)]
(ii) Income from business
(iii) Long-term capital gain
(iv) Income from other sources:
Rent from agriculture land
Less: Permissible deduction (Sec. 57):
(a) Land revenue
(b) Realisation expenses
(c) Depreciation: Not admissible Sec. 57(ii)—see Note below
Income from agriculture [Sec. 2(1A)(a)]
Total income, subject to increase by Rs 42,000 when produce is subjected to
marketing process to fetch better rates.
60,000
-----
60,000
18,000
42,000
2,50,000
(-) 30,000
(-) 20,000
2,00,000
3,00,000
1,00,000
4,00,000
Computation of tax liability: AY. 2008-2009
Senior citizen Not a senior citizen
Particulars
Case I
Produce
subjected to
marketing
process for
better rates
Rs
Case II
Produce
subjected to
marketing
process to make
it saleable
Rs
Case III
Produce
subjected to
marketing
process far
better rates
Rs
Case IV
Produce
subjected to
marketing
process to make
it saleable
Rs
4,42,000
2,00,000
4,00,000
2,42,000
4,42,000
2,00,000
4,00,000
2,42,000
6,42,000 6,42,000 6,42,000 6,42,000
20,000
98,600
20,000
98,600
20,000
1,11,600
20,000
1,11,600
1,18,600 1,18,600 1,31,600 1,31,600
54,500 67,100 42,000 54,600
64,100
Nil
1,282
641
51,500
Nil
1,030
515
89,600
Nil
1,792
896
77,000
Nil
1,540
770
66,023 53,045 92,288 79310
Non-agriculture income
Agriculture income
(a) Tax on non-agriculture income + agriculture
income as if it is the total income:
(i) Tax on long-term capital gain
(ii) Tax on balance of total income at slab rates
(b) Tax on agriculture income + exemption limit of
Rs 1,95,000 (for Case I & II)
(c) Tax payable: (a) – (b)
Add: Surcharge on income tax
Education cess @ 2%
SHEC @ 1%
Tax payable
Tax payable to be rounded off to the nearest
multiple of Rs 10 (Sec. 288B)
66,020 53,040 92,290 79310
http://success-gurus.blogspot.com
Note: While computing income under "other sources" depreciation is allowed only in case where plant,
machinery or furniture is let out on hire or building along with plant, machinery or furniture is let out on hire [Sec.
57(ii)]
Hence no depreciation is allowed in respect of motor car.
Proportionate depreciation on motor car is permissible under the head "business or profession": It is assumed it
has been allowed as the expression "income from business" refers to taxable income after permissible
deductions.
3. RP Bros., an HUF, furnishes the following particulars of its income and outgoing for the previous year 2007-
2008. Receipts
Receipts:
(i) Short-term capital gain
(i) Gross winning from lottery
(ii) Sale consideration of 3/4th of agriculture produce, derived from land located
in India, the balance produce has been kept for family use.
(iii) Net sale proceeds of wild grass and fruits from trees of spontaneous growth
4,00,000
1,00,000
12,00,000
50,000
Payments:
(i) Repair of tube-well
WDV of tuble-well on 1-4-2007
(ii) Wages paid to agriculture labour
(iii) Manuring and spraying charges
(iv) Rent of the building, used for storing agriculture produce on site
(v) Petrol, repair, salary of driver and insurance of motor car.
WDV of motor car on 1-4-2007
50% use of the motor car is for personal purpose of the family
(vi) LIP paid to insure members of the family
(vii) School fees paid for 3 children of the family @ Rs 15,000 per child
(viii) Purchase of infrastructure bonds, covered under Sec. 80C(2)(xix)
(ix) Deposit with LIC for maintenance of a dependant member with disability:
Unabsorbed losses brought forward:
AY: 1998-1999
AY: 1999-2000
AY: 2003-2004
60,000
10,00,000
6,00,000
50,000
50,000
1,50,000
2,00,000
20,000
45,000
90,000
40,000
5,00,000
1,00,000
Determine the total income of the HUF and its tax liability for the assessment year 2008-2009.
http://success-gurus.blogspot.com
Computation of Total Income: AY 2008-2009
Particulars Rs Rs
12,00,000
4,00,000
16,00,000
9,50,000
Computation of net agriculture income for the purpose of aggregation to determine the
rate of tax applicable to non-agriculture income of the HUF. Such computation is done
under the head business profession:
Sale proceeds of agriculture produce
Add: Market value of produce kept for family use: 12,00,000 x (4/3)x (1/4)
Less: Permissible deductions:
(i) Repair of tube-well
(ii) Wages
(iii) Rent
(iv) Petrol, repair, salary of driver— 50%
(v) Manuring and spraying
(vi) Depreciation on tube-well @ 10% on WDV
(vii) 50% depreciation on motor car: (15% of 2,00,000) x 50%
Less: Carried forward: Losses:
(i) Loss 1998-1999-not allowed
(ii) Loss from AY 1999-2000
(iii) Loss from AY 2003-2004
Net Agriculture Income
60,000
6,00,000
50,000
75,000
50,000
1,00,000
15,000
1,00,000
45,000
6,50,000
1,45,000
5,05,000
(b) Computation of Total Income
(i) Short-term capital gain
(ii) Income from other sources:
(a) Winnings from lottery
(b) Net sale proceeds of non-agriculture produce
1,00,000
50,000
4,00,000
1,50,000
Gross Total Income
Less: 1. Contributions paid for approved savings [Sec. 80C(2)]:
(i) LIP on the life of members
(ii) School fees for 3 children of the HUF [Sec. 80(4)(c)]
(iv) Purchase of infrastructure bonds
But deduction restricted upto a maximum of Rs.1,00,000
2. Deposit for maintenance (including medical treatment) of a
dependant with disability (Sec. 80DD)
20,000
Nil
90,000
1,10,000
5,50,000
1,00,000
50,000
Total income 4,00,000
Computation of Tax Liability
(i) Income tax on winnings 30%
(ii) Income tax on non-agriculture + agriculture income: 3,00,000 + 5,05,000 at slab rates
(Non-agricultural income=3,00,000 = 5,50,000 – 1,00,000 – 1,00,000 – 50,000)
(a) Income tax on 8,05,000 as if it is the total income
(b) Income tax on agriculture income + exemption limit as if it is the total income: 5,05,000 +
1,10,000 =
1,90,500
1,31,500
30,000
Income tax on non-agriculture income: a - b 60,000 60,000
Tax on total income
Add: (i) Surcharge on income tax
(ii) Education cess @ 2%
(iii) SHEC @ 1%
90,000
Nil
1,800
900
Tax payable 92,700
http://success-gurus.blogspot.com
4: B Ltd. grows sugarcane to manufacture sugar. The data for the financial year 2007-08 is as
follows:
Cost of cultivation of sugarcane Rs.6,00,000
Market value of sugarcane when transferred to factory Rs.10,00,000
Other manufacturing cost Rs.6,00,000
Sales of sugar Rs.25,00,000
Salary of Managing Director who looks after all operations of the Company Rs. 3,00,000
Solution:
(1) Business Income:
Sales of Sugar Rs.25,00,000
Less: Market value of sugarcane when transferred to factory Rs.10,00,000
Other manufacturing cost Rs. 6,00,000
Salary of Managing Director Rs. 3,00,000
Rs.6,00,000
(2) Agricultural Income:
Market value of sugarcane when transferred to factory Rs.10,00,000
Less: Cost of cultivation Rs. 6,00,000
Rs.4,00,000
5: Mr. P has estates in Rubber, Tea and Coffee. He has also a nursery wherein he grows plants
and sells. For the previous year ending 31.3.2008, he furnishes the following particulars of his
sources of income from estates and sale of Plants. You are requested to compute the taxable
income for the Assessment year 2008-2009:
Manufacture of Rubber Rs.5,00,000
Manufacture of Coffee grown and cured Rs.3,50,000
Manufacture of Tea Rs.7,00,000
Sale of Plants from Nursery Rs.1,00,000
Computation of Taxable Income
Rule Nature of Business Agl Inc. Non-Agl. Inc.
7A Sale of centrifuged latex or cenex manufactured from rubber 3,25,000 1,75,000
7B Sale of grown and cured coffee by seller in India 2,62,500 87,500
8 Growing and Manufacturing Tea 4,20,000 2,80,000
Sale of plants from nursery 1,00,000 -------
Total 11,07,500 5,42,500
Computation of Tax Liability:
(a) Total Income (Agricultural Income + Non-agricultural Income) = Rs.16,50,000
(b) Tax on (a) above = Rs. 4,44,000
(c) Total of (Agricultural Income + Basic Exemption Limit) = Rs. 13,17,500
(d) Tax on (c ) above = Rs. 3,44,250
(e) Tax Payable (b) – (d) = Rs. 99,750
Add: Surcharge @ 10% (since aggregate income > Rs.10 lakhs) = Rs. 9,975
Total of Tax (e) + Surcharge Rs. 1,09,725
Add: Education Cess @ 2% Rs. 2,195
Add: SHEC @ 1% Rs. 1,097
Total Tax Liability Rs. 1,13,017
Tax payable rounded off u/s 288B Rs. 1,13,020
For more information,question papers download free http://success-gurus.blogspot.com
Comments (0)
Post a Comment