• NRI - sale of rural agricultural land

My mother made a will 10 years ago giving me some rural agricultural land. She passed away 4 years ago. There was delay in my getting the land due o problem with some family members. It is being settled amicably and I will be getting It in a few months from now, Before I actually get the property I will become an NRI. When I get this property, can I sell it? As resident Indian, I would not have to pay capital gains tax on rural agricultural land. I think even as NRI, I will not be subject to tax, as I “inherited” the property when I was not an NRI.
Asked 4 years ago in Capital Gains Tax

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.

Moreover, this is exempt irrespective of the residential status of the owner. Thus, even if you become NRI, the sale would be exempt from taxability.

Thanks

Damini

Damini Agarwal
CA, Bangalore
389 Answers
31 Consultations

5.0 on 5.0

Rural agriculture land is not a capital asset in the eyes of law and therefore any gain arises on sale of such land is exempt from tax even though you inherited it after becoming NRI.

You need to file ITR in India for reporting purpose.

We may assist you in ITR Filing.

Vivek Kumar Arora
CA, Delhi
4493 Answers
621 Consultations

5.0 on 5.0

Hi,

Rural agricultural land is not a capital asset and hence any capital gains arising from its sale will be exempt from taxes. The treatment is same for a NRI as well so on the sale of the land you will need not pay any taxes.

Hope that clarifies.

Regards,

Nikhil.

Nikhil Khanna
CA, Mumbai
1429 Answers
19 Consultations

4.8 on 5.0

Hi

Rural agricultural land is not considered as a capital asset and hence, no taxes to be paid on sale of rural agricultural land.

Lakshita Bhandari
CA, Mumbai
5660 Answers
817 Consultations

5.0 on 5.0

Hi,

Yes, you don't need to pay tax on sale of rural agricultural land.

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

Thanks and regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hello,

Yes, rural agricultural land is exempt from taxes in India.

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

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Hi,

Land which is in the category of "Rural Agricultural Land" within the meaning of Section 2(14) of the Income Tax Act, 1961. As such, any gains arising on sale of "Rural Agricultural Land" shall not be taxable.

However, for applicability of definition of "Rural Agricultural Land", you have to go through Section 2(1A) which will determine whether the said land falls under such category or not. For your reference, the definition is reproduced here below:

"any area within such distance, not being more than eight kilometers, 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 ..."

Further, to be sure, please check your local municipal limits and any notification issued in this behalf.

Regards,

Sunny Thakral
CA, Delhi
224 Answers
8 Consultations

5.0 on 5.0

Since Agricultural land is not capital assets so you need not to pay any taxes .Residential status does not matter for taxation purpose.

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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