Longterm capital gain on transfer of agricultural land

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JAYAKUMAR.M.G

JAYAKUMAR.M.G (Querist)
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18 April 2012 Dear Sir
Iam going to dispose my inherited Agricultural land of 100 cents situauted in Muncipal area for Rs 90 Lakhs. Market value of the Plot during 1980 is Rs 5 Lakhs. Whether LTC is applicable for the transaction ?. If applicable what are the eligible exemtions ?Iam planning to purchase another Agricultural land for Rs 40Lakhs and remaining I am planning to invest in construction of a commercial Building.Please advice
RGDS

CA Prasanna

CA Prasanna (Expert)
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18 April 2012 Since this is urban agricultural land (being situated in local limits) of Municipal Corporation Long Term Capital Gain will be attracted.
However you can claim following deductions from Sale Value-
1) Deduction as Indexed Cost of Acquisition.{Market Value on 1.4.81 x (Cost Inflation Index of Year in which asset sold/Cost Inflation Index of 1981-82 i.e.100)
2) Expenses on Transfer

Further, You can claim full amount invested in new agricultural land as deduction u/s 54B.Max deduction available restricted to amt of LTCG.

Regards

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