Rural agricultural land converted into residential land & then sold as residential land
This query is : Resolved
19 March 2025
An assessee bought a rural agricultural land in 2011-12 as it is a rural agricultural land it does not classify as a capital asset, As on today's date i.e. 19/03/2025 rural agricultural land only. Suppose he converts the land to a residential land on 01/04/2025 (It will classify as a capital asset) and sell the whole set of Residential land in 2025-26 only.
Query: What would be the period of holding, would it classify as LTCG or STCG? (As the assessee is not in the business of Real Estate or developing or selling of land and not having any more of such projects we won't be taking this income in the head PGBP)
Query: What would be the period of holding, would it classify as LTCG or STCG? (As the assessee is not in the business of Real Estate or developing or selling of land and not having any more of such projects we won't be taking this income in the head PGBP)
19 March 2025
it will be taxed as STCG.
28 March 2025
Any statutory backings for it sir?
12 August 2025
Section 2(14) – Defines capital asset and excludes rural agricultural land.
CBDT Circular No. 682 dated 13-12-1995 clarifies that for property which was earlier not a capital asset, once it becomes a capital asset, the period of holding is counted from that date.
Income Tax Appellate Tribunal (ITAT) and Courts have held similarly that holding period starts only when asset becomes a capital asset.
CBDT Circular No. 682 dated 13-12-1995 clarifies that for property which was earlier not a capital asset, once it becomes a capital asset, the period of holding is counted from that date.
Income Tax Appellate Tribunal (ITAT) and Courts have held similarly that holding period starts only when asset becomes a capital asset.
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