Tax Consultation (US and India)
2970 Points
Posted on 18 August 2015
First confirm me whether it is rural aggricultural land or urban
You may check it over https://www.incometaxindia.gov.in/Pages/utilities/Capital-Assets2014.aspx
If it says "Such land shall not be deemed as agricultural land in view of Section 2(14) of Income-tax Act, 1961" , then it is an urban aggriculture land
Second, confirm from the land records (municipality etc) as to whether this was recorder as aggricultural land ? Whether it was actually used as aggricultural land ?
If the answer to all above is affirmative, then there is no capital gain since rural aggricultural land is not a capital asset and hence there shall be no tax
S.2(14) Capital asset does not includes
(iii) agricultural land in India, not being land situate—
(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand ; or
(b) in any area within the distance, measured aerially,—
(I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or
(II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or
(III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.
Explanation.—For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year;]