Agricultural Income

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Taxation Management FIN 623

MODULE 4

LESSON 4.10

HEADS OF INCOME (SECTION 11)

Agricultural Income (Section 41) derived by a person shall be exempt from tax under this ordinance.

Agricultural income:

(1) Agricultural income derived by a person shall be exempt from tax under this Ordinance.

(2) In this section, "agricultural income" means,

(a) Any rent or revenue derived by a person from land which is situated in Pakistan and

is used for agricultural purposes;

(b) Any income derived by a person from land situated in Pakistan from

(i)

Agriculture;

(ii)

the performance by a cultivator or receiver of rent-in-kind of any process

ordinarily employed by such person to render the produce raised or received

by the person fit to be taken to market; or

(iii)

the sale by a cultivator or receiver of rent-in-kind of the produce raised or

received by such person, in respect of which no process has been performed

other than a process of the nature described in sub-clause (ii); or

i) any building owned and occupied by the receiver of the rent or revenue of any

land described in clause (a) or (b);

ii) any building occupied by the cultivator, or the receiver of rent-in-kind, of any

land in respect of which, or the produce of which, any operation specified in

sub clauses (ii) or (iii) of clause (b) is carried on, but only where the building is

on, or in the immediate vicinity of the land and is a building which the

receiver of the rent or revenue, or the cultivator, or the receiver of the rent-in-

kind by reason of the person's connection with the land, requires as a

dwelling-house, a store-house, or other out-building.

Agricultural income means:

· Rent or Revenue derived by a person from land.

· Income derived from land situated in Pakistan.

· The land is used for agricultural purposes.

Following Incomes are held to be "Non-Agricultural Income"

Income from spontaneous forest

Income from sale of fruits and flowers growing on land naturally, spontaneously, and without the

intervention of human agency

Interest on arrears of rent payable in respect of agricultural land as it is neither "rent" nor

"revenue" derived from land.

Interest accrued on promissory notes obtained by a zamindar from defaulting tenants.

Income from sale of wild grass and weeds of spontaneous growth

Profit accruing from the purchase of standing crops and resale of it after harvest by a merchant

having no interest in land except a mere licence to enter upon the land and gather upon the

produce, land is not direct, immediate or effective source of income.

Interest received by a money-lender in the form of agriculture produce.

Income from sale of agricultural produce received by way of price for water supplied to land.

Commission earned by the landlord for selling agricultural produce of his tenant.

Dividend paid by a company out of its agriculture income.

Income from fisheries

Royalty income of mines

Income received from land let out for storing crops

Income from butter and cheese making

Income from poultry farming

Maintenance allowance charged on agricultural land.

Following Income are held to be "Agricultural Income"

Taxation Management FIN 623

· If denuded parts of the forest are replanted and subsequent operations in forestry is carried out the

income arising from the sale of replanted trees.

· The fees collected from owners of cattle (normally used for agricultural purpose) for allowing them to

graze on forest lands covered by jungle and grass grown spontaneously.

· Profit on sale of standing crops or the produce after harvest by a cultivating owner or tenant of land.

· Compensation received from an insurance company for danger caused by hailstorm or another natural

calamity to crops or agricultural produce.

· Income from growing flowers and creepers.

· Share of profit of a partner from a firm engaged in agricultural operation (similarly salary received by

him for services in agricultural operations as salary is only a mode of adjustment of the firm's income).

· Interest on capital received by a partner from a firm engaged in agricultural operation.

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