Page 120 - DCOM301_INCOME_TAX_LAWS_I

Unit 4: Exemptions and Deductions - I

Notes
the agriculturists be compared with hard work and long hours of work being put by a
person in trade or industry or in service and then surely the Government would come to
the conclusion that it is now high time to tax the agricultural income so that the rich and
famous people do not walk away without contributing any money to the exchequer.

Finally, it is time now to think of taxing agricultural income and simultaneously the
Government should also think of measures to enhance the income earning capacity of the
agriculturists. In the first 2/3 years the entire income-tax recovered from taxing agricultural
income should be spent by the Government in the development of agricultural activities
and for the welfare of the agriculturists so that ultimately the agriculturist also reaps
better fruits for his labour and the Government earns more revenue because of higher
production of agriculture as a result of implementation of new technologies and new
equipment being made available in the agriculture sector. A question we would now like
to pose to each and every citizen of India is why not now the Government should be
thinking on taxing agricultural income by rising above the politics and in the interest of
nation building and equity to all categories of tax payers of India.
Questions
1. Study and analyse the case.
2. Write down the case facts.

3. What do you infer from it?
Source: http://www.moneycontrol.com/smementor/news/government-policy/should-agricultural-
income-be-taxed-in-india-828150.html

4.9 Summary

Tax exemption refers to a personal allowance or specific monetary exemption which may
be claimed by an individual to reduce taxable income under some systems. Tax exempt
status may provide a potential taxpayer complete relief from tax, tax at a reduced rate, or
tax on only a portion of the items subject to tax.
A tax deduction is a reduction of a taxpayer’s total income that decreases the amount of
money used in calculating the tax due.

Section 10 provides that in computing the total income of a previous year of any person,
any income falls in its ambit shall not be included in the total income, provided the
assessee proves that a particular item of income is exempt and falls within a particular
clause.
Agricultural income as defined in Section 2(1A) is exempt from income-tax in the case of
all assesses. This exemption has been granted on account of the constitutional provisions
relating to the powers of the Central and the State Governments for levying tax on
agricultural income.
Any sum received by an individual in his capacity as a member of H.U.F. is wholly exempt
from income-tax where such sum has been paid out of the income of the family, or out of
the income of an impartible estate belonging to the family, because that has been taxed in
hand of H.U.F.

Share income of a person being a partner of a firm (including Limited Liability Partnerships)
which is separately assessed as such is exempt from tax.
Allowances or perquisites paid or allowed as such outside India by the Central Government
to a citizen of India for his services rendered outside India, would be wholly exempt from
income-tax.

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