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LONG TERM CAPITAL GAIN

Kamal Verma (Financial advisor) (578 Points)

20 February 2020

Dear experts,

To determine urban agriculture land---Municipal Corporation means any municipal corporation or the city where assess is residing. I mean, if a land is 9 kms far from the municipal corporation where assessee resides and 6 kms far from another municipal corporation. Will land be determined as agriculture land???

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4 Replies

rama krishnan (12234 Points)
Replied 20 February 2020

In my opinion nearest municipal corporation to be considered for determining the distance

Kamal Verma (Financial advisor) (578 Points)
Replied 22 February 2020

If land determined on the basis of nearest municipal corporation, it is urban agriculture land. If LTCG arisen on transfer of said land, will it be exempted from income tax???

Ashish Rajput (9 Points)
Replied 24 February 2020

As per definition of capital asset being agricultural land other than rural is considered a Capital Asset and hence LTCG/STCG will arise on transfer of the same.

Nandakumar K Konkar (Partner) (246 Points)
Replied 24 February 2020

Your query relates to agricultural land which lies between 2 municipalities as under: (a) 9 km from limits of municipality where assessee resides & (b) 6 km from limits of another municipality. Your query is incomplete since it is silent on population of these municipalities. Sec 2 (14) says that agricultural land shall be taxable if it lies within following areal distances: (a) 2 km if population of municipality is between 10,000 & 1 Lakh (b) 6 km if population of municipality is between 1 Lakh & 10 Lakhs & (c) 8 km if population of municipality exceeds 10 Lakhs. Based on your info, your agricultural land sale shall be exempt from capital gains only if population of 2nd municipality (other than where he resides) is less than 1 Lakh.