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Sale of agriculture land

Tax queries 492 views 2 replies
Respected Sir,
 
                     I am Rajendra Barot from Mumbai and I have sold agriculture land in rural area in Gujarat in March 2015. It was inherited land and I sold it for 14,50,000/- but I have not bought Agricultural Land, instead I have bought a small Farm House which is non-agriculture  for Rs. 12,00,000/-. My question is do I have to pay Capital Gain Tax ? If yes how much ? 
 
                      Similarly my two brothers have sold on same date for same amount as it was inherited jointly, one brother has bought a house for Rs. 15,00,000/- and other brother has not bought anything. What will be the position of Capital Gain Tax in case of my brothers ?
 
                      Sir, I am eagerly waiting for your answer as I have to file my Return before 31st August.
Replies (2)

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;]

No capital gains if it is located outside the specified area... Mostly the rural agricultural lands are outside the specified area..


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