Agricultural income is fully exempt rom tax.However,if the same is more than Rs 5000 in a year,it is taken into account to determine the rate at which your other incomes will be taxed.Suppose,the exemption limit is Rs 1,10,000 and your income from business is Rs 2,50,000 and agricultural income is Rs 20,000.First you will have to calculate tax on total Rs 2,70,000 assuming agricultural income as taxable.Now add agricultural income to the exemption limit,so you have Rs 20,000 plus Rs 1,10,000.This ccomes to Rs 1,30,000.Now calculate the tax on Rs 1,30,000 also.Now subtract this figure of tax from the tax you calculated for Rs 2,70,000.The figure so arrived at will be your tax liability.Now add surcharge/cess as applicable.Hoever,the above procedure would be applicable only if the agriculture income is Rs 5000 or more.This is what is written in the article.
