Amrita, a resident aged 25 years, manufactures tea leaves from the tea plants, grown by her in India. Manufactured tea is sold in India for ₹40 Lakh. The cost of growing tea plant was ₹15 Lakh and the cost of manufacturi

Computation of Tax Liability of Ms. Amrita for the AY 2019-20 In case where the assessee himself grows tea leaves and manufactures tea in India, 40% of Profit on sale of tea is taxable as business income under the head "Profit and Gains from business and profession" and the balance 60% is agriculture income, which is exempt from tax. Profits from manufacture and sale of Tea = ₹40 Lakhs - ₹15 Lakhs - ₹10 Lakhs = ₹15 Lakhs. Agriculture Income = 60% of ₹15 Lakhs = ₹9 Lakhs Business Income = 40% of ₹15 Lakhs = ₹6 Lakhs The tax liability of Ms. Amrita has to be computed applying the concept of partial integration, since her total income comprises of both agricultural income and non-agricultural income and her agricultural income exceeds ₹5000 p.a. and her non-agricultural income exceeds the basic exemption limit i.e. ₹2,50,000 (applicable in her case). Accordingly, her tax liability would be computed in the following manner: Particulars Amounts (₹) A) Tax on Total Income of ₹15,00,000 being agricultural income and non-agricultural income 2,62,500 B) Less: Tax on agricultural income and basic exemption limit i.e. ₹11,50,000 [₹9,00,000 plus ₹2,50,000] 1,57,500 C) Tax Payable (excluding cess) A-B 1,05,000 Add: Health and Education Cess @4% 4,200 Total Tax Liability 1,09,200