New Delhi — Farmhouses, once seen as rustic weekend retreats, have become status symbols for India’s wealthy. But beyond their luxury appeal, they are increasingly being used as legal instruments for tax savings. Chartered Accountant and AI startup founder Meenal Goyal recently detailed the trend in a viral LinkedIn post, sparking debate about how India’s elite reduce their tax burden.
Agricultural Income: Tax-Free Advantage
India’s Income Tax Act exempts agricultural income from taxation, a loophole that affluent individuals have leveraged for decades. By showing income from crops cultivated on their farmland, wealthy landowners are able to declare zero taxable income from these ventures.
“Show income from crops — no income tax,” Goyal explained. She also pointed out that most agricultural produce attracts only 0–5% GST, further reducing the overall tax outgo for landowners compared to salaried professionals.
FCRF Launches CCLP Program to Train India’s Next Generation of Cyber Law Practitioners
Land Sales and Section 54B Exemption
The benefits extend beyond farming produce. Under Section 54B of the Income Tax Act, individuals who sell agricultural land and reinvest the proceeds in purchasing new farmland qualify for exemptions from capital gains tax.
Additionally, many states provide reduced stamp duty on agricultural land transactions, making such investments even more attractive. According to Goyal, this tax framework enables wealthy individuals to rotate their investments in farmhouses and land while minimizing liabilities.
Why the Rich Prefer Farmhouses
Goyal emphasized that buying farmhouses is not just about luxury weekends in Noida, Gurgaon, or Hyderabad but also about structured financial planning. “A middle-class person pays up to 35% of income as tax every year, while many wealthy individuals legally avoid paying a single rupee,” she said in a YouTube video.
Wealthy buyers often register properties under entities such as companies, trusts, or LLCs rather than in their personal names. This practice unlocks additional benefits:
- Depreciation claims that reduce taxable income
- Asset protection from creditors or legal disputes
- Secrecy in ownership, even during divorce settlements
Such measures not only lower taxes but also protect wealth across generations.
What Exactly Is a Farmhouse?
Traditionally, a farmhouse referred to the residence of a farmer, located on farmland. Today, the term often describes sprawling luxury homes surrounded by greenery, blending rural charm with modern amenities. While serving as weekend retreats, these properties also enable their owners to claim agricultural income and related tax breaks.
A Debate on Fairness
The rise of farmhouse culture highlights a stark contrast between India’s middle class and the ultra-rich. While salaried professionals face significant tax deductions, high-net-worth individuals employ sophisticated financial tools to minimize their obligations.
Goyal concluded that this is not accidental but a reflection of how well the wealthy understand and exploit provisions within the system. With the popularity of farmhouses soaring, the practice of using them as tax shelters is likely to grow further unless regulatory changes are introduced.
