Agriculture land sold to company

Dear Mayank,

Capital gain arising from of sale of any land whether agricultural or commercial is taxable. However as far as agricultural land is concerned you have got some relief from Government. You can avail exemption under section 54B of Income Tax Act 1961. 

Conditions for taking exemptions are:

1. The agricultural land in the two years immediately preceding the date on which the transfer(sale) took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes, and
2. Within a period of two years after that date of transfer(sale), purchased any other land for being used for agricultural purposes

Hence I can conclude that in your case capital gain arising from selling of agricultural land will be taxable however you can save tax by spending the capital gain amount in some other agricultural land.

The points to be kept in mind:

 You will have to hold the new land for at least three years otherwise it will become taxable.

Since you have got 2 years to Invest capital gain amount therefore if you want to take exemption in the year of transfer itself, you can deposit this amount into a special bank account prescribed by central government.

Regards 

Shreesh Kumar

Thanks a lot Shreesh, for your valuable advise