I bought an acre of agricultural land in a rural village of Delhi in municipal limits, ten years back, had been doing farming in it and sold it after six years. I had Capital Gains of 2 cr for which I again bought agricultural land in a village in Haryana. This land is 16 Kms from the nearest town. Now after two years I want to sell this land and use the money for treatment of my husband. If I sell it will I have to have to pay the original capital gains tax? Can I gift it to my daughters and they sell it. Will I still have to still pay the Capital Gains tax ? Can some authorities wave off the clause of three years. My husband is a cancer patient and I want to use the money for that? Thanks.
Dear Ma'am,
Hope you are doing well !!
Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains.
You don't need to pay any tax on old property.
You will be required to pay capital gain tax on new property sales.
Please take a phone consultation for complete understanding.
Hi
If you sell this property, then for the purpose of calculation of capital gains on this new property, the cost of acquisition shall be reduced by the amount of capital gains exempted of the earlier property.
Yes, capital gain tax has to be paid.
No. No such provision.
First of all you must check whether it is considered as rural agricultural land or rural agricultural land and did you claim exemption earlier when you sold first agricultural land.
If it's rural agricultural land your tax can be saved even if it's sold within 2 years.
You can discuss over a call if you want more details.
Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.
Thank you
- As you have sold the new agriculture land within the time period of three years therefore cost of the new land will be reduced by the exemption claimed previously and it will be treated as short term capital chargeable to tax normally. Gift will not waive you from tax liability.
- No
- You can use but sale is chargeable to tax.
Hello,
No, you are not required to pay any capital gain even if the new rural agricultural land is sold within 3 years since the sale of rural agricultural land is exempt.
I hope this answer satisfies your requirement.
Regards,
CA Hunny Badlani
To be precise I had bought the first land on 6/2/2006 for 14 lacs which was in municipal limits of Delhi and sold the same on 6/7/2015 for 2.47 cr. I had capital gains of about 2.12 cr for which I again bought agricultural land which is certainly in rural area. Now I want to sell this land after two years for 1.5 cr. What is my tax liability? Thanks.
You had invested the entire capital gain i.e. 2.12 crore in this rural land and then sold it for 1.5 crore?
If its a rural agricultural land your tax liability is zero.
You have unknowingly used a master strategy to save capital gain.
In case the new agricultural land is rural as per income tax, then you don't need to pay any capital gain tax.
No,
Even if you are selling this agricultural land within 3 years for which you have availed an exemption, this won't be taxable since the sale of rural agricultural land is exempt itself.
Regards,
CA Hunny Badlani
Hi,
- The conclusive factor here are land should be agriculture land and and it should not be within municipal limits of Delhi. Land should be agriculture land at the time of sale.
- If the both the land sold was rural agriculture not within the limits of the municipal limits then both the lands will be not be treated as capital asset and no question of capital gain tax.
- You have to ensure about the nature of the land i.e. rural agriculture land and not within the limits of the municipal corporation.
Thanks
As the new agricultural land is rural, there would be no tax liability on the same.