Consider the following statements:
Statement I: In India, income from allied agricultural activities like poultry farming and wool rearing in rural areas is exempted from any tax.
Statement II: In India, rural agricultural land is not considered a capital asset under the provisions of the Income-tax Act, 1961.
Which one of the following is correct in respect of the above statements?
Income from agriculture is tax-exempt in India, but only core agricultural activities like cultivation qualify. Allied activities such as poultry or dairy are taxable. Also, certain types of land are excluded from capital asset classification under tax law. ❌ Statement I: Incorrect Allied agricultural activities like poultry farming and wool rearing are not tax-exempt under the Income-tax Act, 1961. ✅ Statement II: Correct Rural agricultural land is not treated as a capital asset under Section 2(14), so capital gains tax does not apply on its sale.