Income tax on non-agriculture land sale

The capital gain on sale of the land will be 1.5 crore less the indexed purchase cost. for ex, if the cost was 1 lakh in 1990, then

Sale consideration   1.5crore

Less: Indexed Cost

( 1lakh*785/182) 431319..

the diff will be taxed at the flat 20% rate. 

The tax can be avoided by taking advantage of Sec 54EC or/and 54F of the Act. 

As per Sec 54EC, the capital gains can be invested in the specified bonds issued by REC or NHAI within 6 months max upto 50 lakh. Assessee shall not transfer or convert or avail loan on the security of such bond within three years.

As per sec 54F, the assessee can purchase within 1yr prior or 2 yrs aftr the transaction or construct within 3yrs a residential house provided he does not own more than one residential house on the date of transfer. If the cost of the new house is not less than the net consideration then the whole of the capital gain, otherwise that proprtion as the cost bears to the net consideration shall be exempted.