Capital Gains on barren land?

Hi Chris,

Rural land which is not within 8 km. of the local limit of munipality, etc. having population 10,000 or more is not a capital assets u/s 2(14). So capital gain taxation will not be applicable on this land.

Hi there,

as per the provision of the income tax, Rural agriculture land is not a Capital Assets. Since it is not a capital assets how can it be taxed..

Hence no Capital Gain Tax on sale of rural agriculture land

Enjoy!!!!!!!!!!!!!!!

Thanks for the promt reply. Can you also tell me the tax implications if the land is situated within 8 kms?

It will be treated as capital asset and hence there will be capital gain or loss.

its not a capital asset and hence not taxable

 Agricultural land means agri operations should be carried on at the time of sale.Temporary suspension of activities is ok. But if it is not used for a long time or no income is shown then exemption may not be available.

Mr.Chris Cairns

Ms.Tinku

Mr.Varun Soni

Mr.Born to rule

Mr.CA Devansh Gandhi

Mr.Sudarshan

I would like to add to the matter discussed herein.

 In order to avail of exemption from the Capital Gains Tax on sale of Agricultural Land, three conditions have to be satisfied:

1. You should actually cultivate the land;
2. The land should not have been converted into non-agricultural land; and
3. It should not be situated within municipal , town limit or 8 kms. of a notified town whose population exceeds 10,000. 

Please go through the following cases :

Supreme Court of India

Smt. Sarifabibi Mohmed Ibrahim ... vs Commissioner Of Income-Tax, 204 ITR 631 

Mumbai High Court

Commissioner of Income-Tax v. V.A. Trivedi 172 ITR 95