MY COMPANY PURCHASED A LAND OF RS. 2CRORES BEFORE ONE YEAR AND ON 31 .3.11 IT SOLD WITH PROFIT OF RS 50 LACS. WHAT IS TAX TREATMENT FOR THE SAME? WHETHER THERE IS ANY DIFF IN TAXATION IF LAND IS RURAL OR URBAN?
THE MAIN BUSINESS OF MY CO. IS MFG PHARMA PRODUCT.
11 July 2011
Yes, This is a case of short term capital gain and you have to discharge tax liability @ normal rate i.e. 30% in case of Comapny +ED & SHED + Surcharge (if Applicable). Capital Assest has been defined under the Income Tax Act and capital gain is the applicable on Sales or Purchase of Capital Assests only. If land is in rural area ( out of the municipality limit including specified distamce from the municipality), it is not a capital assests and no income tax is payable on any profit on sales of this land.
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