Compute the indirect tax impact on non-agricultural income using the statutory 3-step Partial Integration Method when agricultural income exceeds ₹5,000.
Additional tax due to agricultural integration: ₹49,920.
Under Entry 82 of List I (Union List) of the Constitution of India, the Central Government cannot levy income tax on agricultural income. Section 10(1) of the Income Tax Act explicitly exempts agricultural earnings. However, the Finance Act prescribes a "Partial Integration Method" to push non-agricultural income into higher tax slabs.
Partial integration applies ONLY if BOTH of the following conditions are met:
1. Net Agricultural Income exceeds ₹5,000 in the financial year.
2. Non-Agricultural Income exceeds the basic exemption limit (₹2.5L / ₹3L / ₹5L).
| Assessee Category | Old Tax Regime Exemption | New Tax Regime Exemption |
|---|---|---|
| Individual (< 60 Years) / HUF | ₹2,50,000 | ₹3,00,000 |
| Senior Citizen (60 - 79 Years) | ₹3,00,000 | ₹3,00,000 |
| Super Senior Citizen (80+ Years) | ₹5,00,000 | ₹3,00,000 |
No. If your non-agricultural income is Nil or below the basic exemption limit, your agricultural income is 100% exempt and zero tax is payable, regardless of the amount earned.
No. Partial integration applies only to Individuals, Hindu Undivided Families (HUFs), Association of Persons (AOP), Body of Individuals (BOI), and Artificial Juridical Persons. Companies and partnership firms are taxed at flat rates.
If agricultural income is up to ₹5,000, it can be filed in ITR-1 (Sahaj). If agricultural income exceeds ₹5,000, you must file ITR-2 or ITR-3.