income is specifically defined under the Tax Act, and agricultural income is exempted Income Tax. following are some the examples of agricultural from the sale of seeds and replanted trees, on capital received by a partner from a firm in agricultural operations, Income from flowers and creepers, Rent received for land etc. are some examples of non-agricultural income: from poultry farming, dairy farming and bee Any dividend paid from an organization’s income etc. It is not exempted from Hence statement I is not correct. the Income-tax Act, 1961 of India, rural land is not considered a "capital asset", hence any gain arising from its sale is not taxable capital gains. section 2(14), the term "capital asset" excludes: land in India, which is not situated: the jurisdiction of a municipality or cantonment with a population of not less than 10,000; or 2 km from such a municipality/cantonment 10,001–1,00,000), 6 km (population 1,00,001–10,00,000), 8 km (population more than 10,00,000)." the other hand, urban agricultural land, which lies specified municipal limits, is treated as a capital and is taxable when sold. statement II is correct.