Regarding capital gain tax

Dear Sir,

Firstly the Agricultural land is not  a capital asset and its sale is exempt from the capital gains tax.

and if the proceeds are tax free then none of the relatable expenses under any name would be allowed as expenditure.

Since the income is tax free than the person can purchase any fixed asset.

For further query

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Gaurav Mittal

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Originally posted by : ashok
	hello, i have few queries regarding capital gain taxes, please clarify on the same and also if this is not the right forum please redirect me to the concerned. this is for agricultural land which falls under capital gain . i have few clarification on how to get exemption a. what is the maximum brokerage amount that can be allowed in percentage b. what are  the maximum expenses that can be claimed in percentage on  survey charges,developmental charges which includes creating pathways,laying fencing stones e.t.c also what are the other developmental charges that is allowed c. if person A has no commercial/residential property ,can A buy commercial/residential property by selling agricultural land d. if person B has one house and one commercial property can he/she buy another house/commercial property by selling agricultural land e. if person C has one commercial can he/she buy another commercial property by selling agricultural land i expect more guidance on the same .thanks in advance for your replies

I assume that the said land is agricultural land falling within the urban limits and hence liable for CG.  Brokerage is any amount you have paid (if it is abnormally high, then you can expect a lot of questions in case of scrutiny).  You are saying that you intend to spend on making the land into a residential layout (I presume this since you said you are going to incur expenditure on development, pathways, fencing etc).  In that case, you may be levied higher tax by treating it as a business venture.  In that case, all your other queries would be infructuous.  The other side is of course that you will be allowed all the expenditure incurred on such development as business expenditure.
 

If the land is rural agricultural land as per the IT act,

No Capital gain on such transfer as Rural agricultural land isn't a capital Asset...

However, if such land is an urban land then,

A. There is no such limit prescribed.

B. No limit prescribed.

C. Yes a person can buy residential flat by selling agricultural land, can claim exemption U/S 54F.

D. No exemption will be allowed under this..

E. No Exemption will be allowed under this.