Regarding the above, concern is about where the agriculture land is situated as the Capital Gain tax on agriculture land is arises only in case when agriculture land fall under the categories of Capital Assets
Section 2(14) which defines Capital Asset reads as under:
“ Capital Asset” means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include 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 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 preceeding 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 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, urbanization of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette.”
I would like to request for the tentative distance of the place at where such land is situated from nearby municipality. If distance is more than 8 km than no question of Capital Gain tax will arises as the land does not fall under the category of Capital Assets. Also Section 10(37) provides the exemption from capital gains from above mentioned agriculture land.
And also, TDS u/s 194LA shall not attract in above acquisition.
In in case land is not fall under above category. Seller has an option to consider the cost or market value as a cost in case of capital assets become the property of the seller before 01.04.1981.
But, In case if the land was sold below circle rate,
Capital Gain tax should be arise in the hand of Seller,
= Circle Rate - Cost of Acquisition
Income form other Source in the hand of Buyer,
= Circle Rate - Purchase price
Need to analyse more in this case .