Agriculture land sale

Agricultural land in rural area is not a capital asset as per IT act and so there will be no capital gains arising from sale of the same.

Regards,

Nikhil.

HI,

Agricultural Land in rural area is not a capital asset and no capital gains shall arise on transfer of such land.Such exemption is covered under section 10(37) of the income tax act, 1961.

Hence there will no capital gains on this sale. If he has no taxable income during the year, then he can just file a NIl ITR ( ITR form -1) and report the exempt income.

Thanks

Damini

Hi

There is no tax liability on sale of rural agricultural land. However, you must report such exempt income in the income tax return.

I assume that your land is a rural agricultural land according to the Income tax Act.

Rural agriculture land is not a capital asset therefore sale of the rural agriculture land is exempt from tax. There is no need to file ITR.

Hi,

Sale of agricultural rural land is not taxable. However, it's better to file ITR 1 and show the income as exempt income income.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Section 2(14)(iii) defines the agricutural land as under: Agricultural land in India, not being land situate— (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;]

Non rural agricultural land is treated as a capital asset and if sold, will create capital gains and tax needs to be paid on the same.

However there are ways to save taxes as well. Please let me know your query in details and then i can explain.

Regards,

Nikhil.

Hi

If it is not a rural agricultural land, you will have long term capital gains which are taxed @ 20%.

In order to claim exemption from capital gains, the amount of capital gains can be invested in another agricultural land, a residential house property or notified bonds.

Hi,

In case of non agricultural land, considering the holding period mention by you, it will be a long term capital gain.

Further, if the property was purchase before 2001-02, then the valuation needs to be done by the registered value to arrive at the fair market value as in the year 2001-02.

Then such FMV shall be indexed to the current FY in which you are selling the land. The difference between the sale price and the indexed value shall be your capital gains/ loss.

If its a gain, then it will be taxable at the rate of 20%. If its a loss, no tax liability will be there.

Thanks

Damini

Non rural agriculture or urban land is a capital asset and on the sale of the same if any capital gain arises the assessee needs to pay tax. You can reinvest the amount in different avenues to avail exemption of the above capital gain.

Non rural agricultural land is subject to capital gain tax as usual. However, you can avail exemption under section 54B or 54F.

54B:

Following conditions should be satisfied to claim the benefit of section 54B.

? The benefit of section 54B is available only to an individual or a HUF

? The asset transferred should be agricultural land. The land may be a long-term

capital asset or short-term capital asset.

? The agricultural land should be used by the individual or his parents for

agricultural purpose at least for a period of two years immediately preceding the

date of transfer. In case of HUF the land should be used by any member of HUF.

? Within a period of two years from the date of transfer of old land the taxpayer

should acquire another agricultural land.

54F:

Exemption u/s 54-F shall be allowed if following conditions are fulfilled.

(i) The assessee is only an individual or a H.U.F.

(ii) The assessee does not own more than one residential house on the date of transfer of the above mentioned assets.

(iii) The assessee transfers above mentioned asset or assets (other than a residential building) and there is a long term capital gain.

(iv) The assessee invests the net sale consideration of above mentioned assets to construct a residential house within 3 year of the sale of the asset or purchases an already built house within one year before or two years after the sale of the above mentioned asset.

(v) The assessee is required not to purchase another residential house with in a period of one year after or constructs within a period of 3 year after the date of transfer of the above mentioned asset/assets.

Please feel free to call/ revert in case you need more clarity.

Thanks and regards

Abhishek Dugar

CA CS B.Com

Hello,

Since it is a rural agricultural land it is exempted.

If it would have been a urban agricultural land the gains would have been taxable @ 20%.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, FCA, LLB, CERT. FAFP