Rural agricultural land sold

In case if the rural agricultural land is sold , has it to be shown in ITR under exempt income? If yes, at what value has it to be shown? Sale proceeds or only gain value? If only gain value then indexed value is to be reduced as cost of acquisition?

By rule,

Rural agricultural land is not a capital asset so it's sale is required to be shown under exempt income or completely not shown in ITR?

 

Kindly please provide guidance.

 

Thanks.

Replies (6)
Quick Summary
When rural agricultural land is sold, it's generally not considered a capital asset and therefore not subject to capital gains tax. This means it usually doesn't need to be declared in your Income Tax Return (ITR). However, if the land falls within specific distance limits from urban areas, it may be classified as urban agricultural land and become taxable. Even if exempt, it's advisable to acknowledge its appearance in your Annual Information Statement (AIS) to avoid potential queries.

As per rule, it is not to be declared in ITR.

But if it is appearing in AIS report, better to declare it in Schedule EI.

It's no appearing in AIS so should I proceed without declaring it in ITR ?

And if I had to declare then at what value should I declare it ?

No harm if the land is Rural Agricultural Land.

If declared You can declare the LTCG after indedxation.

Ok thanks for your prompt response.

You are welcome....                                 

Whether your agricultural land sale is taxable depends on whether it qualifies as rural under the Income Tax Act definition.

Rural agricultural land is NOT a capital asset under Section 2(14)(iii) and there is NO capital gains tax. It also does not need to be reported in Schedule CG of your ITR.

Definition of rural agricultural land:
- More than 2 km from the boundary of a municipality or cantonment with population between 10,000 and 99,999
- More than 6 km from the boundary of a municipality or cantonment with population between 1 lakh and 9,99,999
- More than 8 km from the boundary of a municipality or cantonment with population 10 lakh and above

If your land falls WITHIN these distance limits, it is urban agricultural land, which IS a capital asset. The gain would be taxable as short-term or long-term capital gain depending on the holding period.

Even for exempt rural land, the sale proceeds may appear in your AIS from the registrar. You should acknowledge this in the AIS feedback (mark it as correct) to prevent an automated notice under Section 143(1).

For the full rules on agricultural income exemptions, partial integration, and how Section 10(1) works, this [agricultural income tax guide for AY 2026-27](https://taxgarden.in/blog/agricultural-income-tax-india-section-10-1-partial-integration-ay-2026-27) covers all the scenarios.

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