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LTCG treatment of sale of urban agricultural land

bkp (self-employed) (81 Points)

06 February 2020

Question: Plot of agricultural land (in urban area) is sold.

Can the LTCG from sale of this land be reinvested in a residential property to avail of LTCG exemptions for purposes of tax, or does it necessarily have to be in another agricultural plot. Would be grateful for your guidance.

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160342 Points)
Replied 07 February 2020

Yes, exemption u/s. 54F can be availed...

Roshni (Studwnt) (1141 Points)
Replied 07 February 2020

You can invest in residential property.

bkp (self-employed) (81 Points)
Replied 07 February 2020

Can you please clarify under which provision?? For I am confused by the following regrding sale of agricultural land:

"Conditions you need to meet Under Section 54B for claiming exemption from Capital Gains

The exemption is available to an Individual or a HUF.
The land which is being sold must have been used for agricultural purposes by the individual or his parents or by the HUF for a period of 2 years immediately before the date of transfer.
Another land for the agricultural purpose should be purchased within a period of 2 years from the date of transfer of this land.
The new agricultural land which is purchased to claim capital gains exemption should not be sold within a period of 3 years from the date of its purchase."