Agricultural income refers to the income earned or revenue generated from sources essentially premised on agricultural activities. This includes income from farming land, buildings on or identified with agricultural land, and commercial produce from horticultural land. In the United States, farm income is measured using various metrics such as gross cash income, gross farm income, net cash income, and net farm income. Gross cash income includes all receipts from the sale of crops, livestock, and farm-related goods and services, as well as direct payments from the government. On the other hand, net farm income reflects income after expenses from production and accounts for changes in commodity inventories.
In India, agricultural income is defined under section 2(1A) of the Income Tax Act, 1961. It generally includes any rent or revenue derived from land used for agricultural purposes, income derived from agricultural operations, income attributable to a farm house, and income derived from saplings or seedlings grown in a nursery. Examples of agricultural income in India include income from the sale of replanted trees, sale of seeds, rent received for agricultural land, and income from growing flowers and creepers.
In the United States, agribusinesses are taxed under the corporate income tax structure, and farmers benefit from specific tax provisions that are more favorable than those for many other businesses. These provisions include income averaging, deductibility of certain capital expenditures, treatment of some income from asset sales as capital gains, and reduced tax on farm real estate for state and local property tax purposes.
In conclusion, agricultural income encompasses revenue generated from agricultural activities, and its definition and tax treatment vary by country. Understanding the specifics of agricultural income is essential for farmers and policymakers to make informed decisions and ensure the sustainability of the agricultural sector.
