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income tax on agicultural land

Harsh (Consultanat) (23 Points)

26 October 2007

Dear all,

I want to know is there any tax on receipts of money from sale of Agricultural land

Thanx

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5 Replies

CA.Saibaburao Nanduri (Chartered Accountant) (3847 Points)
Replied 27 October 2007

Dear Harsh !

Some simple questions may not have simple answers !
So as the case with the agricultural land and tax liability under capital gains..!

Sale of agricultural land is not taxable under the head 'capital gains'.
But if such land is situated within 8KM, or such other distance specified, from City/Town etc., then tax on 'capital gain' shall be attracted. 20% of the Profit on sale of land (ie. capital gain) shall be the tax.

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(Guest)

Dear Sirs, Thanx for the reply . But in this specific case the land was held for less than one year or 11 months and no cultoivation has taken place by this or other persons for more than 10 years please let me the th Income tax liability if any

Ramakrishna (Financial Executive) (438 Points)
Replied 29 October 2007

Dear friend, The land in this case is clearly a capital asset, and the transfer in this case is a case of short term capital gains taxable at the normal rates applicable to individuals along with the other incomes.

Vijay K. Agrawal (Service) (608 Points)
Replied 29 October 2007

Dear if it is classifies as agriculture land then CG will be exempt whether no body has cultivated it for 10 year or so if it is withing the limit of Municipal corp etc. and notified and on which agriculture activities are currenty on, then CG will be applicable.

Ramakrishna (Financial Executive) (438 Points)
Replied 29 October 2007

Dear Mr.Vijay K.Agarwal Sir, Is it possible to claim exemption from CG merely on the pretext that the land was kept ready for agriculture for more than a decade and no real agricultural activity has taken place in it? Section 10(37) introduced with effect from 01.04.2005, stipulates that for availing exemption from capital gains arising from the compulsory acquisiton of land, the land must have been used by the assessee for agricultural purposes during the period of two years immediately preceding the date of such transfer. When such a restriction has been prescribed even in a case of compulsory acquisiton case, is it possible to simply walk away with CG exemption on the pretext that the land was kept ready for agricultural purposes for more than a decade. I feel there should be some trace of evidence that the land has been used for agricultural operations in the immediate past and such operations has resulted in some income including a case of loss from such activities. Please clarify!