Besides salary from a PSU, I have agriculture income from land. Do I have to pay any tax on the income from agriculture land?
– Ashvin Bhagat
Income from agriculture is exempt under income tax. However, while computing the tax on total income, it has to be included as per a certain formula due to which the other incomes are taxed at somewhat higher rate though agricultural income per se remains exempt. This is explained below. If the total income of a person includes agriculture income more than Rs 5,000 and total income other than net agriculture income is more than basic exemption limit (i.e. Rs 2,50,000), then income will be calculated as below :
—Compute tax on the total income (including agriculture income as if it is taxable)
— Now, add agriculture income to the basic exemption limit and calculate tax on the same.
— Deduct the tax calculated in the second step from the tax calculated in first step and the amount arrived at is the tax liability.
— The resultant tax amount shall be further subject to cess and surcharge as applicable.
I have not filed income tax returns for the past three years. Can I file them now for all the past three years?
Income tax return can be filed within two years after the end of the relevant financial year subject to certain penalties. I-T return for FY 2015-16 can be filed till March 31, 2018. Hence, you can file return for FY 15-16 and FY 16-17 but no return prior to this period can be filed now. However, this law has been changed for FY17-18 and onwards and returns for these years can be filed only up to one year from the end of financial year.
I received Rs 4 lakh from LIC after a policy matured. Do I have to pay any tax on this?
Exemption of amount received on maturing of the policy is dependent on the amount of the premium paid and the capital sum assured. According to Section 10(10D) of Income Tax Act, any sum received under an insurance policy issued on or after April 1, 2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10% of the actual capital sum assured is exempt. Ordinarily, the LIC policy complies this condition, hence the amount shall remain exempt from tax.
The writer is partner, Ashok Maheshwary & Associates LLP.
Send your queries to fepersonal email@example.com