Capital gain tax on agriculture land

Hi,

Hope you are doing well !

Yes, you land is qualified as a rural agriculture land. Therefore any gains from its sale are not taxable under the head Capital Gains under Section 10(37) of the Income Tax Act,

Please find below the relevant provision for your better understanding:

As per section 2 ( 14),

Capital asset means property of any kind held by assessee whether or not connected with his business or profession, but does not include Agriculture land in India not being a land situated

a) In any area which is comprised within the jurisdiction of a municipality (whether known as 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 the distance, measuredaerially,–

(I) Not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or

(II) Not being more than six kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or

(III) Not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.

Explanation.—For the purposes of this sub-clause, “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;

Thanks & Regards,

Payal Chhajed

Hi

Yes, you land is qualified as a rural agricultural land.

If you sell your agricultural land, it will be exempt from capital gain taxes.

I am quoting below the definition of rural agricultural land for your reference:

As per section 2 ( 14),

capital asset means property of any kind held by assessee whether or not connected with his business or profession, but does not include

Agriculture land in India not being a land situated

a) In any area which is comprised within the jurisdiction of a municipality (whether known as 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 the distance, measuredaerially,–

(I) Not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or

(II) Not being more than six kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or

(III) Not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.

Hi,

If you have any doubt, please let us know.

Thanks & Regards,

Payal Chhajed

Hi

Yes, your land is considered as agricultural land and thus, not a capital asset.

There would be no tax implications on such sale.

For better understanding, use this income tax utility https://www.incometaxindia.gov.in/Pages/utilities/Capital-Assets2014.aspx

Make sure such transaction is reflected in your income tax returns.

Being not chargeable to tax, show it as exempt income in ITR; no other documents required.

Sorry, I can't use tables etc as the website does not allow us to put table. However, you can use income tax utility available on the income tax website to have a better understanding.

Let me know if you need he Link

Further, you should mention this sale as an exempt income in your return of income. You don't need to give proof at the time of filing return.

Dear Sir,

As per income tax act 1961 agriculture land which comes in rural area are exempt on the other hand agriculture land which comes in urban area are taxable..

following comes under the urban agriculture land:

1- Any area within the jurisdiction of the municipality or

2-In any area within the following aerial distance

Population as per last census shortest distance from the nearest municipality

(A) More than 10000 but upto [deleted] kms.

(B) More than 100000 but upto [deleted] kms.

(C) More than [deleted] kms.

Here is your answer

since your agriculture land is beyond 2 kms. from the nearest municipality, so it comes under rural agriculture land accordingly, you are not liable to pay any tax on sale of such agriculture land.

Hope it will help you

Hi,

Your land is falling under section 2 (14)(b)(1) as explained above.

Section 2 (14):

b) In any area within the distance, measuredaerially,–

(I) Not being more than two kilometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh;

Distance between land and nearest town is around 5.25 km having population of 58000. It is beyond 2 km, so it is an rural agricultural land.

As we can't provide the data in Excel form, you can ask further if any doubt.

Thanks & Regards,

Payal Chhajed

Please use the income tax utility. It should be clear then.

Contact in case any further help is required.

Hi,

Your land will be considered as rural agricultural land and you will be eligible for capital gains exemption on selling the same.

Hi,

Please ensure that this transaction is reported as exempt income in the ITR. I dont think you need any more documents. For better clarity, you can use the income tax utility.

It shud be 2 km aerial distance away from the boundary of the nearest municipality in case of population of 10000 to 1 lakh.

Definition of Rural Area – from AY 2014-15 – Any area which is outside the jurisdiction of a municipality or cantonment board having a population of 10,000 or more is considered Rural Area, if it does not fall within distance(to be measured aerially) given below – (population is as per the last census)

2 kms from local limit of municipality or cantonment board If the population of the municipality/cantonment board is more than 10,000 but not more 1 lakh.

You land is an rural agricultural land and it is exempt from income tax but you need to disclose it in ITR.

Yes your land falls in ambit of rural agriculture land and exempt from capital gain.

Disclose the transaction in ITR as exempt income .