Agricultural land meaning

Meaning of Rural agriculture land in India:

1. It situated in any area which is comprised within the jurisdiction of a municipality ( whether known as a municipality, municipal corporation, notified area committee, town committee or by any other name) and its population should be less than 10,000 as per the last published census, or
2. If situated outside the limit of municipality, etc., it should be situated certain kilometers away from the local limits of any municipality, etc. as may be specified by the Central government in the official Gazette. The Central government can notified urban land upto maximum 8Kms from the limits of municipality, etc.

However, Agricultural land as defined above is not considered as Capital Asset,

But Rural Residential Land is a capital asset...

Ms. usha

First af all understand the meaning of agricultural land. You are confused with the terms "agricultural land", "Urban area", and "rural area". The conditions provided by the central govt having regard to population and area are only for the purpose of differentiating between rural and urban land it does not have any link with the term agricultural land. If u see sec2 of the income tax act there u will see that any land used for agricultural purpose shall be agricultural land either it can be situated in rural area or urban area.

In ur case first of all see whether for the last two years (immediately preceeding the date of transfer) it is being used by ur parents for agriculture purpose, if yes it is a agricultural land and any capital gain arising on the sale of such land shall be exempt subject to the conditions prescribed u/s 54B. if not then it is not a agricultural land and it shall be subject to tax without any exemption. It does not matter whether it is situated in urban or rural area. 

If the land is within the municipalty area and use for agriculture immidiately preceeding 2 yeras and sold after converting it NA shall it treated as capital assets?or It is taxable?

Hello, 

Your land is situated within municipality area, therefore it is considered as capital asset & It is taxable.