CAPITAL GAIN BASE ON NOTIFICATION

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When calculating capital gains on rural agricultural land, the key is to refer to the municipal boundaries as they existed on January 6, 1994, the date of the relevant notification. This means the distance from municipal limits should be assessed based on the census data from that specific year to determine if the land qualifies as rural for tax purposes.

Sanjay Ratnani

Sanjay Ratnani

(Querist)

08 September 2026 What is criteria for rural agriculture land based on 1994notification. Base year will be 1994 or in which year land sold

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

08 September 2026 According to various judicial precedents and CBDT clarifications, the relevant municipal boundaries for determining whether a property is rural agricultural land are those that existed on the date of the notification (January 6, 1994).

Sanjay Ratnani

Sanjay Ratnani

(Querist)

08 September 2026 Means we calculate distance from muncipal asper which census

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

08 September 2026 For sales occurring after April 1, 2013, the Income Tax Act was amended to globally replace city-specific notifications with a generic aerial distance-population rule.
Modern Criteria (Post-2013 Amendments)
If your sale falls under current laws where the older notification is superseded, the classification is purely mechanical based on the latest local census population data and aerial distance (measured as the crow flies):
Local Municipality Population .......... Land is Urban (Taxable) if within.......... Land is Rural (Exempt) if beyond..
.Up to 10,000........... Inside local limits only ....... Outside local limits
10,001 to 1,00,000..... ≤ 2 Kilometers ............ > 2 Kilometers
1,00,001 to 10,00,000 ...... ≤ 6 Kilometers ........... > 6 Kilometers

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