JKSSB Written 2022
Answer & Explanation
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Correct Answer:
Option B —
agricultural income
In India, under Section 10(1) of the Income Tax Act, 1961, agricultural income earned by an individual is exempt from central income tax.Why Agricultural Income is Exempt
The primary reason for this exemption is constitutional. Under the Indian Constitution, the Central Government has the power to tax income other than agricultural income, while the power to tax agricultural income is vested in the State Governments.
While some states have the provision to tax it, most choose not to for socio-political and economic reasons. However, it is important to note that agricultural income is often included for "rate purposes"—meaning it can increase the tax slab rate applied to your other non-agricultural income (this is known as the "Partial Integration" of taxes).
Understanding the Other Options
A) Household Property: This is taxed under the head "Income from House Property." If you earn rent or own more than two self-occupied houses, you pay direct tax on it.
C) Business Income: Profits and gains from business or profession (PGBP) are a major component of direct taxation for individuals and corporations.
D) Property Tax: This is a bit of a "trick" option. Property tax is a local tax paid to municipal bodies, but it is not an income category. The question asks which income is exempt from direct tax.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.