Agricultural income is currently exempt from taxation and is not considered part of total income, as mandated by Section 10 (1) of the Income Tax Act of India. 
Special 
Agricultural income is currently exempt from taxation and is not considered part of total income, as mandated by Section 10 (1) of the Income Tax Act of India. Leading up to the Budget 2025 presentation on February 1, there has been a growing concern among experts and taxpayers regarding the disparities in taxation between farmers and salaried individuals. Despite the fact that the agricultural sector employs nearly 50% of the population, its contribution to GDP is only 17%, highlighting a significant gap between small-scale farmers with minimal earnings and a privileged few with substantial wealth.
In India, only 6% of the population files income tax returns, with less than 3% actually paying income tax. The salaried class bears a disproportionate share of the tax burden, contributing around half of the total personal income tax collections.
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Agricultural income is currently exempt from taxation and is not considered part of total income, as mandated by Section 10 (1) of the Income Tax Act of India. The Central Government is unable to impose or collect taxes on agricultural income due to this exemption clause.
Talking about the disparity in the taxation income, CA Himank Singla said a farmer who earns Rs. 5 crores from agriculture, pays zero tax, while one who earns Rs 30 lakh, has to pay Rs 8 lakh as tax.
"If you earn Rs. 5 crores from agriculture, you pay NIL tax. If you earn Rs. 30 lakhs from salary, you pay Rs. 8 lakh tax. Make that make sense! Time to tax agricultural income beyond a certain threshold in the upcoming #Budget2025," Singla wrote on social media platform X.
Another X user wrote: "Salaried Employee: ₹5 crore - Income Tax: ₹1.5 crore. Business Revenue: ₹10 crore - Income Tax: ₹20-40 lakh
(On expenses & deductions). Agricultural Revenue: ₹50 crore - Income Tax: ₹0 (fully exempt under Section 10(1). Being a salaried employee is a curse in India. #tax."
According to Section 10(1) of the Income-Tax Act 1961, farm income is not subject to taxation. This provision aims to protect small and marginal farmers from financial burdens. However, the unintended consequence of this exemption is that wealthy farmers can exploit it to evade taxes, despite benefiting more from public infrastructure, subsidies, and services compared to smaller farmers.
In June 2023, Suhana Khan, daughter of superstar Shah Rukh Khan, acquired a property in Alibaug. The news surfaced when it was revealed that Suhana had purchased an agricultural property in Thal village, Alibaug for Rs 12.91 crore. The registration documents listed Suhana as an "agriculturist", as per news reports.
Commenting on the social media buzz on taxing agricultural income, Taxology India said: "There are many people on social media demanding taxation on agricultural income in this budget. However, they don’t realize that only State Governments have the authority to enact laws for taxing agricultural income. The Central Government cannot levy income tax on it. So, don’t expect this budget to include any provisions for taxing agricultural income."
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