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How to save ltcg tax on sale of urban agricultural land?

sahil (nil) (48 Points)

26 July 2014

hello
We have sold ancestral urban agricultral land (being used for cultivation of Jowar/Maize for last 30 yrs) situated in corporation area in march 2014 for rs 1800000. Govt. Valuer made cost of aquisition Rs 140000 in F.Y 1981. CA told that complete sell amount Rs 1800000 needs to be invested in 54 EC bonds to save LTCG Tax. My job Salary is Rs 200000 yearly.we need money & not in position to buy another land/house.

In 2004 my uncle had sold N.A. plot & after computing, only "LONG TERM CAPITAL GAIN' was invested in 54EC bonds & not complete sell amount.
CA told that rules have changed after 2004, Sec 54EC is not applicable to sale of agri. land.

My question is can we invest in 54EC bonds , if yes complete sell amount or only LTCG? & Sec 54 EC applicable or not & what about Sec 54, 54F?

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7 Replies

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 27 July 2014

urban agri. land are considered as capital assets and hence sec 54ec will be available to you and only capital gains amt needs to be invested. you can invest in bonds of NHAI or REC with max. upto 50lakhs in a FY to claim exemption of sec 54EC. you also have option of 54F if you own only one house property. you can purchase another house property from ltcg amt for exemption under 54f.

1 Like

sahil (nil) (48 Points)
Replied 27 July 2014

Originally posted by : Tribhuvan Aditya Singh
	Thanks

sahil (nil) (48 Points)
Replied 27 July 2014

Thanks a lot but my CA is not agreeing . He has given 2 option First pay Tax @ 20% on LTCG,second invest complete Rs 1800000 in NHAI/REC bonds. I have asked same question on different web & reply is same.

Either My CA doesnt know facts or he is forcing us to pay Tax. Is there any document to show to CA to proove 54 EC is applicable to me ?

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 27 July 2014

why will you show any proof... ask your CA to give proof in support of his answer for investing whole amt. instead of capital gain amt.

1 Like

sahil (nil) (48 Points)
Replied 27 July 2014

I have taken the printout of Sec 54EC & shown to CA, The CA has confirmed sec

54EC by going through "INCOME TAX READY RECKONER" book & agreed that only

LTCG needs to be reinvested. By profession i m a Doctor & i have done spoon feeding to CA

Thanks a lot dear friend....

Tribhuvan Aditya Singh (Student as well as Self-employed) (3710 Points)
Replied 27 July 2014

i shouldnt be saying this.... but the fact is that some CAs are like that and they dont agree on what is right but argue on what they said.

sahil (nil) (48 Points)
Replied 31 July 2014

yes assuming S be sell consideration and G be LTCG . under sec 54F if X amount is used for construction then X is substracted from S or X is substracted from G.