Profit on rural agriultural land

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Gaurav (Querist)
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14 January 2016 IN CASE OF INDIVIDUAL, DO WE HAVE TO SHOW PROFIT ON SALE OF RURAL AGRICULTURAL LAND UNDER EXEMPT INCOME OR NO DISCLOSIRE FOR SAME IS REQUIRED AS THIS IS NOT A INCOME.

CA CMA CS Ram Pavan Kumar Melam

CA CMA CS Ram Pavan Kumar Melam (Expert)
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14 January 2016 The capital receipts are not chargeable to tax, except on the transfer as per section 47 of capital assets specified in Section 2(14). If both the provisions are attracting (Sec. 2(14) and Sec. 47), then liable for capital gains tax u/s 45(1) in case of gain.

As per section 2(14) first the agricultural land (both rural and urban) is included in the capital asset definition by referring "property of any kind....." and again as per sub-clause (iii) specifically excluded rural agricultural land. Hence, in your case it is a capital receipt but not taxable capital gain.

However, you have to ensure that income from transfer of such land should not be a business income. If you held that agricultural land as stock-in-trade, then income from its transfer amounts to business income. As you written "show profit on sale....", the term "profit" and "sale" are used in PGBP, be careful while disclosing the same.

Regarding disclosure, if you take ITR4, should not disclose any where in sheets "Profit and Loss" or "Part A - OI" or "BP" and there is no provision in sheet "CG" to disclose income on transfer rural agricultural land.

The only sheet available is "EI" schedule, at item 6. In my view, better to disclose here, if you are filing ITR4 for ITR3 also same.

Gaurav

Gaurav (Querist)
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14 January 2016 If filing ITR 1, then were to show.

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