Agriculture land sale capital gain

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Agricultural land located more than 2 kilometres from a municipality with a population under 1 lakh is considered rural and therefore not a capital asset. Consequently, the sale proceeds from such land are not subject to capital gains tax. While you don't need to declare it as a capital gain, you may need to report it in Schedule EI of your ITR-2 form if clarification is required.

mankar Ravikant N.

mankar Ravikant N. (Querist)

27 September 2021 please suggest me

agricultural land situated in a area beyond 2 kilometers from the local limits of municipality which has a population of less 1 lacs . is sale proceeds of such land is liable to tax under capital gain . if so how to show the proceeds of sale in a return of income

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

27 September 2021 If the land is beyond 2 KM measured aerially, form the local limits of the municipality, having population less than 1 lakh, it will be treated as Rural Agricultural Land, as per sec. 2(14) of IT act.
No capital gain liability over its transfer/sell.

Ganeshbabu K

Ganeshbabu K (Expert)

27 September 2021 In your case, agriculture land is not capital asset as per 2(14) of IT Act.

So at the time of selling it question of capital gain doesnt arise, as capital gain attracts only on transfer of capital asset

Dont disclose in ITR is my suggestion, you can clarify to tax officer if they send any notice to explain transaction.

Schedule EI is the place to report this in ITR-2 FORM

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