Income tax applicability on land sale
Sri nivas (4 Points)
17 March 2016Sri nivas (4 Points)
17 March 2016Hi srinivas,
As ur agricultural land is under municipal corporation its considered as a capital asset for the purpose of calculating Cap gains...
Only section 54B is available for exemption on sale of agricultural land....the condition is "An agricultural land should be purchased within 2 years and should not be sold within 3 years of purchase. (or the previous exemption becomes taxable again)"
As u are constructing a house and not buying a agri land, u are not allowed to take exemption from the longterm cap gains .
wait for another person to reply..i might be wrong...there might be another provision...i dont know
thank you
ubaid
Amit Kanunga
(Article Assistant and Post Gradute)
(644 Points)
Replied 17 March 2016
Originally posted by : Sri nivas | ||
Hi,My father has sold his agriculture land which received from his father and this land area under Municipal Corporation, buyer has paid the stamp duty/ registration fee and land value is 8 lakhs. Does this amount taxable or not to my father? My father has a farmer and he is planning to build a house with this amount in another land. Please give your suggestion on income tax applicable or not ? |
Following conditions should be satisfied to claim the benefit of section 54B. • The benefit of section 54B is available only to an individual or a HUF • The asset transferred should be agricultural land. The land may be a long-term capital asset or short-term capital asset. • The agricultural land should be used by the individual or his parents for agricultural purpose at least for a period of two years immediately preceding the date of transfer. In case of HUF the land should be used by any member of HUF. • Within a period of two years from the date of transfer of old land the taxpayer should acquire another agricultural land. In case of compulsory acquisition the period of acquisition of new agricultural land will be determined from the date of receipt of compensation. However, as per section 10(37), no capital gain would be chargeable to tax in case of an individual or HUF if agricultural land is compulsorily acquired under any law and the consideration of which is approved by the Central Government or RBI and received on or after 01-04-2004.
CA Neha Gupta
(Managing Partner LNG & Associates)
(1839 Points)
Replied 17 March 2016
Amit Kanunga
(Article Assistant and Post Gradute)
(644 Points)
Replied 17 March 2016
Originally posted by : CA. Neha Gupta | ||
The land sold is under Municipal Corporation, hence it is a capital asset and you are liable to pay Capital gain tax on its sale. Since, you are planning to build a house, so you will also lose exemption benefit. |
Agree With Ma`am...