The agriculture sector is one of the most important sectors in India, contributing around 15% to the country’s GDP. The sector employs around 54% of the country’s workforce and is a major source of livelihood for a large section of the population. The income from agriculture is taxable under the Income Tax Act. Agricultural income is defined as the gross receipts derived from agriculture. This includes the rent or revenue from land, buildings, machinery, equipment, or other property leased or rented for agricultural purposes. It also includes the income from the sale of agricultural produce, animals, and so on. There are different income tax return (ITR) forms for different types of taxpayers. Individuals and Hindu Undivided Families (HUFs) engaged in agriculture are required to file ITR-2. Partnership firms and companies engaged in agriculture are required to file ITR-3 and ITR-6, respectively.
There is no specific ITR form for agriculture income. You can either file ITR-1 or ITR-4, depending on your other sources of income.
Who will file ITR-2?
Only individuals who do not have income from profit and gains of business or profession and also do not have income from profits and gains of business or profession in the nature of: interest salary are eligible to file ITR-2 for AY 2021-22.
If you are engaged in a farming activity, you will need to file Schedule F (Form 1040) in order to report your income and expenses from the farm. You will need to file this along with Form 1040, 1040-SR, 1040-NR, 1041, or 1065. Depending on your state and local laws, your farming activity may subject you to state and local taxes and other requirements, such as business licenses and fees. Be sure to check with your state and local authorities to determine what, if any, taxes and requirements apply to your farming activity.
What is ITR 1 vs ITR2
ITR-1 is for individuals who are not earning an income from through activities like the lottery, gambling etc. On the other hand, ITR-2 is for individuals who earns through activities like a lottery, gambling etc. The individual earns from 1 house property only. The individual earns from more than 1 house property.
If you are an individual taxpayer or a HUF and you get profits and gains from business or profession, you can file ITR 3. This is the form for taxpayers who want to report their income from salary/pension and other sources.
How to show agricultural income in ITR 2?
The Income-tax Return Form 2 (ITR 2) requires individuals to disclose their agricultural income. The following details are to be provided:
1. Name of district along with pin code in which agricultural land is located
2. Measurement of agricultural land in Acre
3. Whether the agricultural land is owned or held on lease (drop down to be provided)
4. More items.
The ITR-2 is a form used by Indian citizens as well as non-resident Indians to file their tax returns with the Income Tax Department of India. Filing Income Tax in India requires an assessee to fill up and submit different forms depending on the category the assessee falls under.
Do you or will you declare farming income on your income tax return?
If you are earning money from farming, you need to report this income to the CRA. The agency considers income from a range of sources as farming income, and not reporting it can result in penalties. Be sure to include all forms of income, such as sales of crops and livestock, in your report.
Agriculture income from land situated outside India is not exempt from tax.
What Turbotax do I need for farm income
Schedule F is used to calculate the net farming profit or loss for an individual. This schedule is generally filed with the 1040 form.
For AY2022-23, ITR-1 can be filed by an individual who is a resident of India and has income from the following sources:
-Salary/Pension
-One house property
-Income from other sources (including interest, income from other assets, etc.)
Income from other sources (including interest, income from other assets, etc.) is clubbed with the income of the individual if the source of income is within the specified limits.
Should I fill ITR-1 or 4?
The tax return forms ITR-1 and ITR-4S are meant for different kinds of taxpayers. ITR-1 is used by individuals who have income from salary, one house property, and other sources (except casual income). On the other hand, ITR-4S applies to those who have presumptive business income, salary, one house property, and other sources (except casual income).
These are the sources of income that make an individual eligible to file Form ITR-2. The individual must have income from salary or pension, income from at least one house property, and income from capital gains or losses on sale of investments or property.
Who should use ITR 3
If you have income from business or profession, and you are not eligible to file Form ITR-1 (Sahaj), ITR-2 or ITR-4 (Sugam), then you must file Form ITR-3.
A person must file ITR 3 if he or she is an individual or a HUF without a source of commercial or professional profits. ITR 4 must be filed by a person who serves as a director of a corporation or owns unlisted stock shares. ITR 5 is filed by a person, a HUF, or a corporation.
Who can not file ITR 3?
An individual or HUF who is earning income as a partner of a partnership firm which is engaged in a business/profession is not eligible to file ITR-3.
The ITR-2 is filed by individuals or HUFs who do not have income from profit or gains of business or profession, and to whom ITR-1 is not applicable. It includes income from capital gains, foreign income, or any agricultural income more than Rs 5,000.
Final Words
There is no separate ITR form for agriculture income. The income from agriculture is taxed under the head ‘Income from other sources’. The ITR form that is to be filled will depend on the total income of the assessee and the nature of the income.
The answer to this question depends on many factors, such as the country in which the agriculture income is earned, the type of agriculture income, and the taxpayer’s personal tax situation. In general, however, the appropriate ITR form to fill out for agriculture income is the ITR-4.
