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Special Income

Agricultural income in India as an NRI

The income itself is exempt. What it can quietly do is raise the tax on the rest of your Indian income.

You have inherited farmland in India, or otherwise earn agricultural income here, and you want to know how it is taxed now that you are an NRI. The usual assumption is either that it is fully taxable because you live abroad, or fully invisible because agricultural income is exempt. Both are wrong in part. The income is exempt whatever your residency, but if you have other taxable income in India it can quietly raise the slab that income is taxed at, and there is a FEMA rule that decides whether you could even own the land. Here is how agricultural income works for an NRI.
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Last reviewed: 26 July 20266 min readReviewed by Preetesh Maloo, CA

The short answer

Agricultural income from land situated in India is fully exempt from income tax under Section 10(1), and that exemption does not depend on your residency, so an NRI's agricultural income is exempt just as a resident's is. But there is a catch called partial integration: if your net agricultural income is more than ₹5,000 and you also have other Indian income above the basic exemption limit, the agricultural income is added in only to decide the rate, which pushes your other income into a higher slab even though the agricultural income itself stays untaxed. On FEMA, an NRI cannot buy agricultural land, a plantation or a farmhouse, but can inherit it and keep earning agricultural income from it. Watch the boundary: selling the land, or selling standing trees, is not agricultural income and is taxable.

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Related situations

The income is exempt, whoever earns it

Agricultural income from land situated in India is exempt from income tax under Section 10(1), and what the law means by agricultural income is set out in Section 2(1A): rent or revenue from agricultural land in India, income from actually carrying out agricultural operations on it, and income from a qualifying farm building. Crucially, the exemption turns on the land being in India and used for agriculture, not on who earns from it. So your residency makes no difference here. An NRI's agricultural income from Indian land is exempt exactly as a resident's would be.

Where NRIs go wrong is at the edges of the definition. Selling the agricultural land is a capital gains event, not agricultural income. Selling standing trees or spontaneously grown produce, where there was no real cultivation, is not agricultural income either. And processing beyond what is ordinarily needed to make the produce marketable can turn part of the receipt into taxable business income. So the exemption is generous but narrow: it covers the farming, not everything that happens on or to the land.

The catch: it can raise the tax on your other income

Even though agricultural income is exempt, it does not always leave your tax bill untouched. Through a mechanism called partial integration, agricultural income is added to your other income for one limited purpose: to decide the rate. It applies only when both tests are met, your net agricultural income is more than ₹5,000, and your other, non-agricultural Indian income is above the basic exemption limit. When both are true, the agricultural income is notionally stacked on top of your taxable income to fix the slab, so your taxable income is charged at a higher average rate, while the agricultural income itself stays exempt.

One subtlety worth stating plainly: this rate rule is not in Section 10(1). The exemption is statutory, but the aggregation is provided each year by the Finance Act, so it is a live rule for the current year too, not something you can assume away. For an NRI, the practical effect is that agricultural income back home can raise the tax on your Indian rent, interest or capital gains, which is exactly the interaction people miss when they treat the two as separate. On the ownership side, FEMA lets an NRI or OCI inherit agricultural land, a plantation or a farmhouse, but not buy one, so if you are earning agricultural income it should be from land you inherited or held from before you became an NRI.

What's involved

What the CA actually does

  1. 1

    We confirm the exemption

    We check that your Indian farm income really is agricultural income under Section 2(1A), so the exemption holds and nothing spills into taxable business income.

  2. 2

    We handle partial integration

    We compute the partial-integration effect correctly, so your other Indian income is taxed at the right slab, neither over nor under.

  3. 3

    We keep the land sale separate

    If you sell the farmland, we treat it as capital gains under the right rules, not as exempt agricultural income, and plan the tax.

  4. 4

    We check the FEMA position

    We confirm you hold the land in a FEMA-compliant way, inherited rather than bought as an NRI, and keep the income and any repatriation clean.

What to have ready

Documents you'll typically need

  • Details of the agricultural land and how you acquired it
  • Your agricultural income and expense records
  • Your other Indian income for the year
  • Your PAN and residency details

Your destination country can change the details

Requirements differ from one consulate, university and visa route to the next, how recent the figures must be, how long funds must have been held, and which certificates are mandatory. We assemble the documents around the exact checklist you're applying under. To see how India's tax treaty with your country of residence affects related filings, set your country below or compare all 46 countries.

References on this page

  • Agricultural income from Indian land is fully exempt under Section 10(1), regardless of the earner's residency
  • Partial integration: if net agri income is over ₹5,000 and other income exceeds the basic exemption, agri income raises the rate on the rest (an annual Finance Act mechanism, not Section 10(1) itself)
  • An NRI cannot buy agricultural land, a plantation or a farmhouse under FEMA, but may inherit it
  • Sale of the land, or of standing trees, is not agricultural income and is taxable

Frequently asked questions

Common questions

No. Agricultural income from Indian land is exempt under Section 10(1) whatever your residency, so an NRI's agricultural income is exempt just like a resident's. FEMA also allows an NRI to inherit agricultural land, even though you cannot buy it.

Because of partial integration. If your net agricultural income is over ₹5,000 and your other Indian income is above the basic exemption limit, the agricultural income is added in only to fix the rate, pushing your other income into a higher slab. The agricultural income itself stays untaxed.

The exemption continues. It moves from Section 10(1) to Section 11 read with the Schedules to the 2025 Act from FY 2026-27, and the rate-aggregation continues through the annual Finance Act. For the return you file for FY 2025-26, the old Section 10(1) still applies.

No. Selling the land is a capital gains event, not agricultural income, so it is taxable, subject to the specific rules and any exemption for agricultural land. Only the farming income is exempt, not the sale proceeds.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

Basic exemption limit: new regime

Right now: Rs 4,00,000

Where it works differently

The taxpayer is a non-resident with capital gains
Unused basic exemption CANNOT be set against income taxed at special rates under s.111A/112/112A.
The set-off proviso is limited to residents, so a non-resident cannot use the basic exemption against these gains.
The old regime applies
Rs 2,50,000, unchanged. Senior-citizen higher limits are resident-only.
Old-regime slabs were not revised.

Commonly got wrong

  • The basic exemption is Rs 3 lakh. Stale from FY 2025-26.Rs 4 lakh in the new regime; Rs 2.5 lakh in the old.

No basic-exemption set-off for non-residents on special-rate income

Right now: Not available to non-residents

Where it works differently

The NRI has ONLY capital gains of Rs 3 lakh
Full tax on the whole Rs 3 lakh. An otherwise identical resident would pay nothing.
The proviso allowing the shortfall to be adjusted is resident-only.
The income is the Rs 1.25 lakh s.112A exemption
That IS available to non-residents. Different provision.
s.112A is not residence-restricted.

Commonly got wrong

  • An NRI with income below the basic exemption owes nothing. Only true if none of it is special-rate income.Split ordinary income from special-rate income.

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Earning agricultural income from Indian land?

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