Tax exemption on rural non-agriculture land

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This discussion clarifies that selling rural non-agriculture land, even if plots are sold on different dates, does not allow for capital gains tax exemption by purchasing new agricultural land. Eligible options for Long Term Capital Gains (LTCG) include investing in Sec 54EC bonds (up to £50 lakhs) or purchasing a house property under Sec 54F. The calculation of LTCG depends on the land's original purchase date or inheritance date, not the conversion date to non-agriculture use. While there's no restriction on buying agricultural land with the proceeds, tax deductions under Sec 54B are not applicable in this specific scenario.

Jai Mata Di

Jai Mata Di (Querist)
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10 January 2023 Dear Sir,
On selling rural non-agriculture land into various plots on different dates.
Can I exempt capital gain on purchasing new agriculture land within 2 years?
How to exempt taxes by other ways?
Please clear.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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10 January 2023 1. No. Purchasing of new agricultural land will not be eligible for deduction in this case.
2. Investment in Sec. 54EC bond, or purchase of any house property (if eligible u/s. 54F) will be suitable options for LTCG arrived from the sell of plots.

Jai Mata Di

Jai Mata Di (Querist)
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11 January 2023 Thanks Sir, for your valuable reply..

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 January 2023 My Pleasure..

Jai Mata Di

Jai Mata Di (Querist)
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11 January 2023 Dear Sir,
1) The land(22yrs old) is inherited that came in my name 4 years ago. So LTCG computation will effect from actual purchasing date or from came in name date or from conversion of use land date?
2) Will I have to invest all capital gain amount or only 20% of capital gain amount in sec 54EC bonds & 54F, as you said.
3) How much amount can invest in one financial year in bonds? Is any overall limit.
4) Can I buy agriculture land in remaining all 80% of capital gain?
5) What means of purchasing house property?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 January 2023 Whether the land was non agricultural from the origin?
Or was converted to NA afterwords? if yes, when?

Jai Mata Di

Jai Mata Di (Querist)
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11 January 2023 Original land was agricultural since 2000-2021 & converted in 2022.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 January 2023 1. There will be long term capital gain from 2000 to 2021. STCG after that.
2. & 3. sec. 54EC is investment over gain amount. Max limit is 50 lakhs. while sec. 54F investment is on the total receipts... no limit...
4. Not eligible now.

Jai Mata Di

Jai Mata Di (Querist)
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11 January 2023 So in this scenario, I can not purchase agricultural land any how.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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11 January 2023 There is no restriction on purchase, but you cannot claim deduction u/s.54B of the IT act...

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