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Farming is the backbone of our country, and farmers play a vital role in feeding the nation. While many farmers are not required to pay income tax on their agricultural income, there are still cases where filing an Income Tax Return (ITR) becomes important. Whether it’s applying for a loan, claiming a refund, or having non-agricultural income, knowing about ITR filing can be helpful.
In this guide, we will explain when farmers need to file ITR, what income is taxable, and how to file the return — all in simple language.
Latest updates
- ITR filing Due date for FY 2024-25 (2025-26) has been extended from 31st July 2025 to 15th September 2025
Benefits of ITR Filing for Farmers
Proof of income for applying for loans, credit card, and subsidies
Makes it easier to get agricultural or personal loans from banks
Helps claim refunds if tax is deducted on non-agricultural income
Acts as valid income proof for visa applications
Ensures compliance if there is any taxable non-agricultural income
Allows carry forward of losses from other income sources
Builds a reliable financial history over time
Useful for eligibility under certain government schemes and benefits
Types of income for farmers
1. Agricultural Income: Agricultural income forms the backbone of earnings for most farmers. It includes revenue generated from a range of farming activities, including:
Crop Cultivation: This encompasses income derived from cultivating crops such as grains, vegetables, fruits, and cash crops like cotton or sugarcane. It covers all stages of crop production, from planting to harvesting.
Agricultural income is typically exempt from income tax under Section 10(1) of the Income Tax Act, 1961.
2. Non-Agricultural Income: In addition to income derived directly from farming activities, farmers may also earn non-agricultural income from various other sources, including:
Animal Husbandry: Income from rearing and breeding livestock, poultry, and other animals falls under this category. It includes revenue from selling livestock, eggs, milk, wool, or other animal products.
Dairy Farming: Farmers who engage in dairy farming earn income from milk production and sale, as well as from products derived from milk such as butter, cheese, and yogurt.
Rent from Agricultural Land: If farmers lease out their agricultural land to others for farming or non-farming purposes, the rental income generated falls under non-agricultural income. This can be a significant source of additional revenue for farmers.
Interest on Investments: Farmers may earn interest income from investments made in fixed deposits, savings accounts, or other financial instruments. This income is taxable under the head “Income from Other Sources” and must be included in the total income for tax calculation purposes.
Income from Other Businesses: Some farmers may engage in non-farming businesses alongside their agricultural activities. This could include businesses such as retail, hospitality, transportation, or any other entrepreneurial ventures.
Non-agricultural income is subject to income tax as per the prevailing tax rates and is not eligible for the agricultural income tax exemption.
Understanding the distinction between agricultural and non-agricultural income is crucial for farmers when filing their Income Tax Returns (ITRs). Proper categorization of income ensures compliance with income tax act and helps optimize tax planning strategies.
What is Agriculture income?
The Income Tax Act defines agricultural income through three main activities:
1. Rent or revenue from agricultural land in India: This includes income received for granting the right to use land. However, proceeds from land sales are not considered agricultural income.
2. Income from agricultural land, involving:
- Basic operations like cultivation, tilling, sowing, and planting directly on the land.
- Subsequent operations like weeding, pruning, harvesting, etc., and processes making produce market-ready.
- Sale of agricultural produce, with income partly exempt and partly taxable based on whether the produce undergoes processes to become marketable.
Rules are prescribed for bifurcating income into agricultural and non-agricultural for products like tea, coffee, and rubber.
| Operation | Agricultural Income | Non-Agricultural Income |
| Growing and Manufacturing Tea | 60% | 40% |
| Manufacturing Rubber | 65% | 35% |
| Growing and curing Coffee | 75% | 25% |
| Coffee grown, cured, roasted, and grounded with or without mixing chicory or other flavouring ingredients | 60% | 40% |
3. Income derived from farm buildings for agricultural operations is classified as agricultural income under certain conditions:
The building should be situated on or in the vicinity of agricultural land and used by the landowner or cultivator for residential or storage purposes related to agricultural activities.
One of the following conditions must be met:
- The land is assessed by land revenue or a local rate collected by government officers.
- If the above condition isn’t met, the land should not be located within specific regions as follows:
| Aerial distance from municipality* | Population as per last preceding census. |
| Within 2 kms | 10,000 to 1,00,000 |
| Within 6 kms | 1,00,000 to 10,00,000 |
| Within 8 kms | > Rs. 10,00,000 |
Taxation of Agriculture income
Agriculture income is exempt as discussed above. The Income Tax Act indirectly taxes agricultural income by partially integrating it with non-agricultural income, aiming to tax the latter at higher rates. This method applies to individuals, HUFs, AOPs, BOIs, and artificial juridical persons when two conditions are met: net agricultural income exceeds Rs. 5,000 annually, and non-agricultural income surpasses the basic exemption limit.
Which ITR form is applicable for farmers?
Agricultural income is reported under the “Agriculture Income” column in the Exempt income schedule of Income Tax Return (ITR) forms. Specifically, in ITR 1, which is also known as the Sahaj form, there is a dedicated section for declaring agricultural income. However, there’s a condition associated with using ITR 1: it’s applicable only when the agricultural income does not exceed Rs. 5,000.
If the agricultural income surpasses the Rs. 5,000 limit, then ITR 2 form needs to be filed instead. ITR 2 is a broader form that allows for the declaration of various types of income, including agricultural income exceeding Rs. 5,000.
Income tax rates for Farmers
Old tax Regime
| Income | Tax rates |
| Upto ₹ 2.50 lakh | 0% |
| ₹ 2.50 lakh – ₹ 5 lakh | 5% |
| ₹ 5 lakh – ₹ 10 lakh | 20% |
| Above ₹ 10 lakh | 30% |
You Can claim deduction under Section 80C, 80D, 80G, etc
For senior citizen (age between 60 & 80 years), tax rate is 0% upto ₹ 3 lakhs. Rest of the rates are same.
For super senior citizen (age above 80 years), tax rate is 0% upto ₹ 5 lakhs. Rest of the rates are same.
In Old tax regime, a maximum tax rebate under section 87A of Rs. 12,500 is available for income upto Rs. 5 lakhs meaning your income is totally tax free till Rs. 5 lakhs. The rebate under section 87A is not allowed to a Non-resident.
New tax Regime (FY 23-24)
| Income | Tax rates |
| Upto ₹ 3 lakh | 0% |
| ₹ 3 lakh – ₹ 6 lakh | 5% |
| ₹ 6 lakh – ₹ 9 lakh | 10% |
| ₹ 9 lakh – ₹ 12 lakh | 15% |
| ₹ 12 lakh – ₹ 15 lakh | 20% |
| More than ₹ 15 lakh | 30% |
New tax Regime (FY 24-25)
Income | Tax Rate |
Upto ₹ 3 lakh | 0% |
₹ 3 lakh – ₹ 7 lakh | 5% |
₹ 7 lakh – ₹ 10 lakh | 10% |
₹ 10 lakh – ₹ 12 lakh | 15% |
₹ 12 lakh – ₹ 15 lakh | 20% |
Above ₹ 15 lakh | 30% |
New tax Regime (FY 25-26)
| Income Range (₹) | Tax Rate |
|---|---|
| Upto ₹ 4 lakh | Nil |
| ₹ 4 lakh – ₹ 8 lakh | 5% |
| ₹ 8 lakh – ₹ 12 lakh | 10% |
| ₹ 12 lakh – ₹ 16 lakh | 15% |
| ₹ 20 lakh – ₹ 20 lakh | 20% |
| ₹ 20 lakh – ₹ 24 lakh | 25% |
| Above ₹ 24 lakh | 30% |
Due date of ITR filing for Farmers
The Due date to file Income tax return is 31st July.
In case you have missed this deadline then you can file belated ITR till 31st December with late fees.
Also for any mistake made while filing ITR before 31st July, you can make corrections by filing Revised ITR any number of times till 31st December.
If you miss deadline of Belated income tax return filing then you can file Updated ITR till 2 years from the end of relevant assessment year with late fees and additional taxes.
How to file ITR of Farmers?
Step 1: Gather Necessary Documents as mentioned above
Step 2: Choose the Right ITR Form
As a farmer, you’ll likely file ITR using Form ITR-1 or Form ITR-2, depending on your income sources.
Step 3: Fill in the Details
Ensure you input accurate information regarding your income, deductions, and tax payments. Double-check to avoid any errors that might lead to complications later on.
Step 4: Claim Deductions
You’re entitled to various deductions under Section 80C (like investments in PPF, LIC, etc.), Section 80D (health insurance premiums), and Section 80G (donations). Claim these deductions wisely to minimize your tax liability.
Step 5: Submit and Verify
Once you’ve filled in all the required details and submitted the ITR, it’s time to verify your return. You can do this electronically using Aadhaar OTP, Net Banking, or by sending a signed physical copy.
Step 6: Keep Records
After filing your ITR, maintain copies of the filed return, acknowledgment receipt, and supporting documents for future reference. These records are essential for income tax notice.
Looking for help?
Let A R Dhorajiya & Co. make it easy for you. Whether you have agricultural income, non-agricultural income, or both — we guide you through every step.
Contact us today at +91 9769647582 for a consultation or to get started with your ITR filing
Frequently Asked Questions
No, it is not mandatory if the farmer has only agricultural income and it is within the exempt limit. However, if the farmer has non-agricultural income above the basic exemption limit of Rs. 2,50,000, filing ITR is required.
If agricultural income exceeds ₹5,000 and the total income (including non-agricultural income) exceeds the basic exemption limit, the farmer must file ITR using ITR-2.
Agricultural income is exempt under Section 10(1) of the Income Tax Act to support the farming community and rural economy. That’s why most farmers do not pay income tax.
Yes, farmers are exempt from paying tax on income earned from agricultural activities, but not on non-agricultural income.
No, the sale of rural agricultural land is not taxable as it is not considered a capital asset under income tax rules.
In ITR-2, agricultural income should be reported under the “Schedule EI” (Exempt Income) section.
Mention the total agricultural income in the “Exempt Income” section (Schedule EI) and ensure correct details of landholding, location, and crop type if required.
Only if they have taxable non-agricultural income or if they need to show proof of income (e.g., for loans, visas, etc.). Otherwise, it is not mandatory.
Proof can include land ownership documents, sale receipts of crops, Kisan Credit Card statements, bank passbooks showing agricultural transactions, and lease agreements (if applicable).
Agricultural income itself is tax-free, but it is added for rate calculation if the non-agricultural income exceeds the exemption limit. This is called the “partial integration method.”
There is no upper limit for exemption — agricultural income is fully exempt from tax under Section 10(1), but it is considered for tax rate purposes if non-agricultural income exceeds the threshold.
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