Method of Accounting for Agricultural Income
Method of Accounting for Agricultural Income: Agricultural income shall be computed for the purposes of the Act in accordance with the method of accounting regularly employed by the assessee.
- Notwithstanding anything contained in sub-rule (1), Government may
- require, by a general or special order published in the official Gazette, that the accounts shall be maintained in such form and in such manner as may be prescribed; and
- prescribe the manner in which payment of commercial nature shall be made or commercial transactions recorded and thereupon the agricultural income of the assessee shall be computed on the basis of the accounts or records maintained or payments made accordingly.
Where no method of accounting has been regularly employed, or if the method employed is such that in the opinion of the Collector, the agricultural income cannot be properly deducted therefrom or where in any case to which sub-rule (2) applies, the assessee fails to maintain accounts, make payments or record transactions in the form or manner, as the case may be, prescribed under the said sub-rule, the agricultural income of the assessee shall be computed on such basis and in such manner as the Collector thinks fit.
Agricultural Income and its Taxation in Punjab
The Agricultural Income is Exempt from tax under Income Tax Ordinance, 2001 and in Income Tax Ordinance, 2001 Agriculture Income is defined and explained under section 41.
In order to claim exemption of Agricultural Income as per provisions of 41 and section 111(1)(d) of the Income Tax Ordinance, 2001.
Therefore, provincial law on agriculture income have fundamental importance to conclude on whether such income is exempt from tax or not, while computing individual income tax liability under the provisions of Income Tax Ordinance, 2001.
These Punjab Agricultural Income Tax Rules, 2001 explains the procedure of exemption, forms used, Method of accounting, Payment of tax with return of total agricultural income, Return of total agricultural income, Notice for furnishing return of total agricultural income, Revised return of total agricultural income, Self-assessment, Assessment on the basis of return, Notice for production of books of account, Assessment on production of accounts, evidence, Best Judgment assessment, Limitation for assessment, Additional assessment, Payment of tax on demand, Collection of tax as arrears of land revenue, Suspension and remission of tax, Refund of tax, Maintenance of Accounts etc.
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To read more on Agricultural Income and Taxation click here (Agricultural Income and its Taxation in Punjab).
