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Capital gains on sell of inherited rural agriculture land

Garvit Dave (Portfolio Analyst & Tax Consultant) (295 Points)

10 May 2012

Dear Friends,

I have sold inherited Rural agriculture Land at Rs.30 lakhs. Does it attract any capital gain tax or any other tax?

I understand that rural agriculture land is not capital asset hence it should not come under the perview of capital gains tax.....but if I keep this Rs 30 lakh in my bank a/c or invest in buying new house will i get benefit of exemption???

Please help me out on this...its an urgent!!

Thanks & Regards

Garvit Dave

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8 Replies

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 10 May 2012

Hi Garvit,

Since you have sold rural agricultural land, it is not a capital gain.

Hence, no cap gains tax has to be paid.

As for buying new house, you can do the same. But keep in mind that you have to invest full Rs. 30 Lakhs in buying the new house.

CA Ketan Waghela (Partner at Elite Educare) (356 Points)
Replied 10 May 2012

Garvitji,

Your understanding is correct. Sale of agriculture land does not attract Capital Gain, it is exempt.

You can purchase house property.

But i dont agree with Pratik Agrawalji to invest full consideration as it is exempt.

Members, Please correct me if I'm wrong.

1 Like

Roopwant Soni (Chartered Accountants) (32 Points)
Replied 11 May 2012

Dear The cap gain will be exempt only if the land located beyond the 8 km from the municipal limit of the city. Otherwise it will not be an agriculture land.

1 Like

Member (Management) (325 Points)
Replied 11 May 2012

If you read the definition of capital asset u/s 2(14), you will realize that if the agricultural land is situated within 8 km of any urban area, then it is treated as capital asset and capital gains is payable on sale. Merely because it is rural and agricultural land does not automatically qualify for exemption from capital gains.

Jigar Joshi (Taxx) (41 Points)
Replied 30 August 2012

Please Friends Reply that capital gain is exmpeted under which section.????

nilesh (gfgfg) (21 Points)
Replied 15 October 2012

hello,

i have sold my agriculture land to 50lakhs. it is not falling in the capital gain area. so it is fully tax execpted.

but i want to invest only 20 lakh in buying property & 30 lakh i have to put in FD so it is possible or not ? in these case how much tax i have to pay

kindly revert back with your valuable suugestions.

you can also reach to me on nileshdha @ gmail.com

Regards,

Nilesh