It is a very well known fact that the agricultural income is not liable to be taxed. This agricultural income is not to be shown in the gross total income of the assessee because if we have a look at the different heads of the income prescribed under the Income Tax Law we do not find any specific head of income whereby agricultural income is treated as a specific head of income and made liable to income tax as such.
However, it should be noted very carefully that agricultural income is generally, speaking fully exempted from income tax without any upper limit but from a practical angle it should be noted that the income from agriculture is to be aggregated only for rate purposes. This aggregation of agricultural income is to be done for all categories of tax payers. However, agricultural income upto ` 5,000, as per the Finance (No. 2) Act, 2009 is not to be aggregated with other income.