Rent from Agriculture land

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- I have agricultural land in rural area . It's rental income is not declared in previous ITR .

Q1- . If I sell the land then will I get a tax notice for not showing previous years agriculture rent income.

Q2- if I am getting rent of FY 2020-21 in next year, then that rent should be declared in which year.

Replies (5)
Agricultural income generally means  (a) Any rent or revenue derived from land which is situated in India and is used for agricultural purposes. (b) Any income derived from such land by agriculture operations including processing of agricultural produce so as to render it fit for the market or sale of such produce. (c) Any income attributable to a farm house subject to satisfaction of certain conditions specified in this regard in section 2(1A). Any income derived from saplings or seedlings grown in a nursery shall be deemed to be agricultural income.
and show in exempt income in itr
Capital gains may arise in that case.

Rent received should be reported in that financial year in which it is received

I have not  shown  agricultural income in previous years ITR filing , even in exempt income. So will i get a tax notice or penalty?

 

I think no
A1) Sale of Rural Agricultural Land will not attract Capital Gain Tax because Rural Agricultural Land is not a Capital Asset u/s 2(47). However, be careful because Income Tax has it's own definition of rural agri land, in which it should not just be within rural vicinity, but it should also not be located at a certain distance from the nearest municipal area.

Rent received from agricultural land would constitute agricultural income, and would therefore be exempt from tax u/s 10(1). But you're still expected to report such income if you're also receiving income from other sources. This is because if agricultural income is not your only income, then tax has to be calculated using a different method which requires the exact amount of exempt income. So there is cause for concern to that extent.

A2) I think Rent would be declared in the year of accrual, and therefore declaration in FY2020-21 seems more appropriate


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