MUSHROOMS - NOT AN AGRICULTURAL INCOME

Agricultural income is not taxable under Section 10 (1) of the Income Tax Act as it is not counted as a part of an individual's total income. However, the state government can levy tax on agricultural income if the amount exceeds Rs. 5,000 per year.

Agricultural income is exempt from income tax. However, the Income-tax Act has laid down a method to indirectly tax such income. This method or concept may be called the partial integration of agricultural income with non-agricultural income. It aims at taxing the non-agricultural income at higher rates of tax.

Agricultural income includes in its ambit income from farming land, buildings on or identified with agricultural land as well as commercial produce from a horticultural land. 

*However , Since mushrooms are not grown on cultivated land ( no cultivation of land is required for natural growth of mushrooms ) . 

Mushrooms are fungus which are produced from spawn and not plants or crops and hence not agriculture.Hence income from sale of mushroom isn’t agricultural income.