Sale of land situated in rural part of India

Hi,

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.It is totally exempt.

Hello,

The sale of agricultural land is not taxable under the capital gain head.

I hope that this answer satisfies your requirements.

Regards,

CA Hunny Badlani

Since the land is recorded as agricultural in revenue records and beyond the specified limit from municipal limits, it would be regarded as agricultural land.

Agricultural activity on the agricultural land is the condition for exemption u/s. 54B.

Even if there has not been any agricultural activity on this land up till now, still it would be considered as agricultural land. There would be no tax liability on the same.

As per section 2(14) they havent defined what is agricultural land so you may use this as your benefit and claim such rural agricultural land as exempt from Income tax act.

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Thank you.

Hello Sir,

Yes, it will be considered as agricultural land as mentioned in the B1 khasra naksha.

There would be no capital gain tax liability on sale of rural agricultural land. 

Hi

If the land being sold is a rural agricultural land as per the income tax act, there's no condition of land being used for agricultural purpose.

The condition is under section 54B for Urban agricultural land.

Rural agricultural land is not a capital asset and hence entirely exempt.

Please refer to section 2(14) for the definition of rural agricultural land.

It will still be considered as agricultural Land .

2 years of use of land as agriculture purpose is for Urban Agriculture land & not rural.

( By Definition only Rural Agri land is not a capital Asset. Thus it wont be taxed.)

The below condition for Urban agricultural land as specified u/s 54B:

The land which is being sold must have been used for agricultural purposes by the individual or his parents or by the HUF for a period of 2 years immediately before the date of transfer.

So, you can go ahead for sales without any capital gain tax liability.

Agriculture land situated in rural area is not a capital asset. Here two aspects are important meaning of agriculture land and definition of rural area. To qualify for agriculture land, there are multiple factors to be taken into consideration i.e. previous and current usage of the land, nature of land in revenue records, any agriculture income derived by the seller etc. For rural area, What is the population of your municipality or cantonment board?. 

Contact personally for detailed discussion.