sale of property-- urgent

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 June 2011 hello
my uncle want to sold an agriculture land situated in rural area which he had purchased 19 year back in1,00,000. now sale price is20,00,000. this land is not recorded in books of accounts because its not used for business purpose.

As per income tax this land is not capital asset so there is no income tax payable. but my query is that can my uncle show the profit of1900000 as white money in books of accounts.

reply plz

U S Sharma

U S Sharma (Expert)
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24 June 2011 19 years ago, 1 lac was big amount for incometax, u have to establish that his personal savings was more than the land value by that time,

there is no such bar to utilize the sale proceeds, but its better to keep records of purchase cost and source of payment of purchase value.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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24 June 2011 First of all the Income Tax Department cannot ask you to give details beyond the period of 10 years. In your case the land was purchased for 1 lac 10 years back. Your uncle must be having records and documents to show that the land was purchased 19 years back in his name and that too at 1 lac then there is no issue.

On sale of land let him get 20 lacs no one can stop him. In Income Tax what he is is to pay is Tax and that too capital gains tax. Since the holding period is more than 3 years the excess over 1 lac is to be treated as long Term Capital Gains.

The gain is 19lacs and on 1 lac index cost is to be added and deducted from 19 lac. Whatever amount comes you have to pay 20% as long term capital gains tax.

The transaction shall be entered in 2011-12 and accordingly the entire tax need not be paid immediately. Of the total tax so calculated you have to pay 30% by 15th September, 2011, another 30% by 15th December, 2011 and the balance 40% by 15th March, 2012.

Hence go ahead with the transaction but mind it do not forget to file the Income Tax return or do not forget to include the capital gains with the regular income of your uncle.

Querist : Anonymous

Querist : Anonymous (Querist)

24 June 2011 hello sir...
This land is agriculture land situated in rural area and used for agriculture purpose so it is not included in capital assets. So no need to pay income tax. Am I right sir?

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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25 June 2011 No. If you have earned capital Gains then you have to pay Capital Gains Tax. Kindly refer Section 50B

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