Capital gain on sale of agriculture land

Dear expert
One of my client sold agriculture land in A.Y.20-21 for 12 lacs. He got it by inheritance...mean from
his forefathers....it's not possible to get its cost of acquisition. He didn't investment anything till now...
Dear sir/madam, kindly guide me in this aspect regarding capital gain treatment and tax exemption means...
Replies (4)
Quick Summary
This discussion addresses capital gains tax implications when selling agricultural land. It clarifies that while rural agricultural land is generally exempt, urban agricultural land is subject to capital gains tax. The advice covers calculating the gain using the acquisition cost as of April 1, 2001, indexed for inflation, and highlights the possibility of tax exemption by reinvesting the proceeds into other agricultural land.

Land is rural agriculture land or Urban agriculture land ?
Urban agriculture land

As mentioned by you, you sold Urban agriculture land for Rs.12 lakhs
You can save tax by investing the capital gain in others agriculture land, but if you are not purchasing any agriculture land capital gain arise on sale is taxable.

Calculation of capital gain:
As this property is old property, You have to take Value of Property as on 01.04.2001 as cost of Acquisition.
Deduct that Cost of acquisition after indexation from sale value (i.e 12 lakhs ) to arrived at Capital Gain.

E.g. If value of land as on 01.04.2001 is 3 lakhs
than indexed cost of Acquisition comes=3,00,000/100*289=8,67,000

and Gain = 12,00,000-867000=333000
taxable

but if you invest that 3,33,000in other agricultural land , than total Gain is exempt.

Dear Expert 

 

I have purchased agriculture land in the year 2007-08 of Rs. 4,20,000/-. It is in very remote area and very less populated. And I have sold such land in 2017-18 in 1,05,00,000/- after converting such agriculture land to non-agriculture as per the requirement of purchaser. And after that I have invested such proceedings in rural agriculture land in the same year. Whether am I liable to pay any capital gain? As agriculture land is exempted from Capital gain Tax.

 

Please advice. Thanks in Advacne

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