Capital gains on sale of agricultural land and house constructed on the land
This query is : Resolved
MAKARAND DAMLE
(Querist)
28 April 2026
Assessee sold agricultural land having Mango, Coconut and Supari Trees for Rs.81,00,000/-
Rs.81,00,000/- is bifurcated as Rs.62,16,000/- towards sale of land and Rs.18,84,000/- towards cost of house constructed on the land.
My question is whether both above receipts are exempt from capital gains tax ?
Rs.81,00,000/- is bifurcated as Rs.62,16,000/- towards sale of land and Rs.18,84,000/- towards cost of house constructed on the land.
My question is whether both above receipts are exempt from capital gains tax ?
28 April 2026
The correct view is that both receipts cannot be blanketly treated as exempt.
The amount attributable to agricultural land will be outside capital gains tax only if the land qualifies as rural agricultural land under section 2(14). If it is urban agricultural land, capital gain will be taxable, subject to possible exemption under section 54B if conditions are satisfied.
The amount of ₹18,84,000 attributed to the house constructed on the land should be examined separately, because the house/building is a separate capital asset. Exemption for the house portion will not arise merely because it is situated on agricultural land. Its taxability will depend on period of holding, cost of construction, nature of use, and availability of exemption under section 54/54F, if applicable.
Therefore, exemption depends on facts such as location of land, municipal distance/population, agricultural use, cost records, construction date, and reinvestment details.
The amount attributable to agricultural land will be outside capital gains tax only if the land qualifies as rural agricultural land under section 2(14). If it is urban agricultural land, capital gain will be taxable, subject to possible exemption under section 54B if conditions are satisfied.
The amount of ₹18,84,000 attributed to the house constructed on the land should be examined separately, because the house/building is a separate capital asset. Exemption for the house portion will not arise merely because it is situated on agricultural land. Its taxability will depend on period of holding, cost of construction, nature of use, and availability of exemption under section 54/54F, if applicable.
Therefore, exemption depends on facts such as location of land, municipal distance/population, agricultural use, cost records, construction date, and reinvestment details.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Gst credit note by supplier
- Missed uploading GST Invoice
- Due date for filing return for the partner in partnership subjected to Tax Audit
- GST on reimbursement of expenses
- Query on effect of registration of property
- Goodwill transfer of deceased father’s firm – ICAI applying a 27.04.2026 cut-off to the 3 year limit
- Wrong CMPo8 file
- Whether output tax is taken credit by purchaser
- Number of years as per AS amortisation of Goodwill
- Equity Share Sale and Purchase
- Classification of income of P Ltd company as business or profession
- Opting out" of regime provided under subsection (1A) of Section 115BAC but Form 10IEA is not filed.
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Need to correct "Whether it is last installment " response in Form 26 QB
- " Income from House Property " in joint names of co-owners
- REGARDING TDS RETURN OF FORM 27Q
- Notice under e-Verification Scheme
- GST demand notice for ITC reversal against exempted supply.
- RCM ON SECURITY CHARGES FROM INDIVIDUALS
- How to get money back from delisted company
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
