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Agricultural income tax calculator: is farm income taxable?

Agricultural income in India, including theka or lease rent from farmland and money from selling crops you grew, is exempt from income tax. But if it is over ₹5,000 and your other income is above the basic exemption limit, it is added to your other income to set your tax rate. This is called partial integration, and it often means you pay more tax on your other income. Enter your farm and other income to see your tax, the extra tax caused by the farm income, and the working step by step.

Free · No sign-up · Runs privately in your browser· Figures checked 29 October 2026

Tax year 2026-27 · new regime

Is your farm income taxed — and what does it add?

Where do you live?
Tax regime
₹
= 3 lakh · Cash or crop share, for the year, less land revenue you paid
₹
Crop sales minus seed, labour, diesel and other costs
₹
= 8 lakh · Salary, house rent, interest — after deductions. NRE interest is tax-free; leave it out
Filing for an earlier year?
Which year

The slabs, the ₹5,000 test and the partial-integration formula are the same for both years; only the section numbers change.

Your income tax for 2026-27 (new regime, incl. 4% cess)

₹36,400

Your ₹3,00,000 of farm income is tax-free, but it pushes your other income into higher slabs. It adds ₹15,600 to your tax — about 5.2% of the farm income.

Tax without farm income₹20,800
Tax with farm income₹36,400
Extra tax from farm income₹15,600

Does partial integration apply?

  • Yes: Net farm income is more than ₹5,000 (yours: ₹3,00,000)
  • Yes: Other income is more than the ₹4,00,000 basic exemption limit (yours: ₹8,00,000)

Both are true, so farm income is counted only to set the rate on your other income — it is never taxed itself.

Step-by-step working

  1. Tax on other income + farm income: ₹11,00,000At new regime slab rates, as if it were all taxable
    ₹50,000
  2. Tax on farm income + basic limit: ₹7,00,000₹3,00,000 + ₹4,00,000, at the same slab rates
    − ₹15,000
  3. Income tax (step 1 − step 2)
    ₹35,000
  4. Health & education cess (4%)
    ₹1,400
  5. Total income tax
    ₹36,400

NRIs don’t get the section 156 rebate, so the “no tax up to ₹12 lakh” rule doesn’t apply to you.

Counts as agricultural income (exempt)

  • Theka, batai or lease rent from land used for farming — cash or crop share
  • Selling crops you grew, after ordinary processing to take them to market
  • Income from a nursery growing saplings or seedlings
  • A farm building on or next to the land, used as a home or store because of the farming

Not agricultural income (taxable)

  • Selling the land itself — capital gains if it is urban land
  • Rent for a mobile tower, brick kiln, godown or other non-farm use
  • Dairy, poultry or fish farming
  • Farmland outside India, or trading crops you bought

Is your land rural or urban? Check before you sell →

Filing your return

With more than ₹5,000 of farm income you can’t use ITR-1 — file ITR-2 (or ITR-3 if you also have business income) and show ₹3,00,000 as exempt agricultural income. Keep the theka agreement, khasra/girdawari entries and crop-sale receipts in case the tax office asks.

How this was worked out

Agricultural income is defined in section 2(5) and exempt under section 11 (Schedule II, item 1) of the Income-tax Act, 2025. The Finance Act, 2026 adds it to your other income only to set the rate, when net farm income is above ₹5,000 and other income is above the basic limit: ₹4 lakh in the new regime (section 202); in the old regime ₹2.5 lakh, or ₹3 lakh / ₹5 lakh for residents aged 60–79 / 80+.

Tax = tax on (other income + farm income) − tax on (farm income + basic limit). New-regime slabs: nil to ₹4 lakh, then 5%, 10%, 15%, 20% and 25% for each ₹4 lakh, and 30% above ₹24 lakh. Old regime: 5% to ₹5 lakh, 20% to ₹10 lakh, 30% above. Residents get the section 156 rebate when total income is up to ₹12 lakh (new) or ₹5 lakh (old). Surcharge from ₹50 lakh, then 4% cess.

Other income here means income taxed at slab rates. Capital gains taxed at special rates, and HUFs, aren’t covered by this calculator.

An estimate for one individual, using rates for Tax year 2026-27 (unchanged by Budget 2026), checked on 29 Oct 2026. Rounding, other deductions and special-rate income can change the figure. Check with a chartered accountant before you file.

How to use it

  1. Choose whether you live abroad (NRI) or in India, and your tax regime. The new regime is the default.
  2. Enter the theka or lease rent you received for the year and any profit from farming the land yourself, after costs.
  3. Enter all your other taxable Indian income, such as salary, house rent or NRO interest, after deductions.
  4. Read your tax, the extra tax the farm income causes and the step-by-step working, then check it with your CA before you file.

Is agricultural income taxable in India?

No. Agricultural income is fully exempt from central income tax, whoever earns it, including NRIs. It was section 10(1) of the Income-tax Act, 1961. From 1 April 2026 it is item 1 of Schedule II, read with section 11, of the Income-tax Act, 2025. The definition, in section 2(5) of the new Act (old section 2(1A)), covers rent or revenue from land in India used for farming, income from farming that land, selling the produce after the usual processing to take it to market, certain farm buildings, and nurseries.

The catch is the rate. For individuals and HUFs, the yearly Finance Act adds your net agricultural income to your other income to decide which slab your other income falls in. The farm income itself is never taxed. It just makes your other income more expensive.

How does partial integration of agricultural income work?

It applies only when both of these are true: net agricultural income is more than ₹5,000, and your other (non-farm) income is more than the basic exemption limit. That limit is ₹4 lakh in the new regime. In the old regime it is ₹2.5 lakh, or ₹3 lakh / ₹5 lakh for residents aged 60–79 / 80 and over. If either test fails, the farm income is simply ignored.

When it applies, the tax is worked out in three steps: (1) tax on other income + farm income, (2) tax on farm income + the basic limit, (3) step 1 minus step 2. Then come any rebate, surcharge and 4% cess. Example for an NRI in the new regime with ₹8 lakh of other income and ₹3 lakh of theka rent: tax on ₹11 lakh is ₹50,000, tax on ₹7 lakh is ₹15,000, so the tax is ₹35,000 + cess = ₹36,400. Without the farm income it would be ₹20,800, so the theka adds ₹15,600.

Is theka or lease rent from farmland agricultural income?

Yes. Rent from land in India that is used for agricultural purposes is agricultural income, whether you are paid in cash (theka or lease) or a share of the crop (batai). This is true even if you live abroad and never farm the land yourself. What matters is that the tenant uses the land for farming.

If the same land is let out for something else, such as a mobile tower, brick kiln, godown, parking or a marriage ground, that rent is not agricultural income and is taxed normally. Dairy, poultry and fish farming are not agriculture either. Keep a written lease that says the land is for cultivation, and keep the khasra or girdawari entries that show crops.

Is income from selling agricultural land agricultural income?

No. Money from selling the land itself is never agricultural income, and the definition specifically leaves out gains from transferring urban agricultural land. What happens instead depends on where the land is. Rural agricultural land is not a capital asset at all, so selling it gives no capital gain to tax. Agricultural land inside or near a town (the 2, 6 and 8 km bands) is a capital asset, and the gain is taxed as capital gains.

Use the agricultural land capital asset checker to see which side your land falls on before you sell. If you are an NRI, also plan for the TDS the buyer must deduct.

How do you show agricultural income in your ITR?

If your net agricultural income is more than ₹5,000 you can't use ITR-1. File ITR-2, or ITR-3 if you also have business income, and show the farm income in the exempt income schedule. If it is more than ₹5 lakh, the form also asks for details of each piece of land: district, PIN code, area, whether you own or lease it, and whether it is irrigated or rain-fed.

Large farm income figures get checked, because people sometimes use them to explain cash. Keep the lease or theka agreement, land records showing you as owner and the land as cultivated, crop-sale or mandi receipts, and bank entries. NRIs file ITR-2 in any case.

Questions people ask

No. Agricultural income from land in India is exempt for NRIs too. But NRIs don't get the section 87A / section 156 rebate, so if your other Indian income is above ₹4 lakh (new regime), farm income over ₹5,000 is added for rate purposes and usually raises your tax.

Theka (cash lease rent) from farmland used for cultivation is agricultural income and exempt. It only affects your tax through partial integration: it can push your other income into a higher slab. Rent for non-farm use of the land is fully taxable.

It is the method that adds farm income to other income only to find the tax rate. Tax = tax on (other income + farm income) minus tax on (farm income + basic exemption limit). It applies to individuals and HUFs when farm income is over ₹5,000 and other income is over the basic limit.

The ₹12 lakh rebate test looks at your total income, which doesn't include farm income. But the rebate (up to ₹60,000) comes off the tax worked out with farm income included, so a resident with ₹10 lakh of salary and ₹5 lakh of farm income can still owe some tax. Confirm your own case with a CA.

No. There is no upper limit on the exemption itself. The ₹5,000 figure only decides whether farm income is used to set the rate on your other income, and whether you can file ITR-1.

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