Sale of rural agricultural land


In 1998 rural agriculture land received by a person after death of his parents. agriculture was done on it but person sale his land in year 2009-10 at rs 13lac.
1-how to calculate initial value of land?
2-if there is profit what is tax treatment?
3-sale of land was done by bank transaction.. is there any need of showing in the scheme of undisclosed money and pay tax now... If yes then do explain please
CA Final (Author)

Rural Agricultural Land is not a capital asset unless it comes under specified category. Hence income from Rural Agricultural Land is not taxable as per Section 10(1).

1. Initial value would be cost of acquisition of his parents.

2. No Capital Gain will arise on sale of Rural Agricultural Land.

3. Agricultural Income is to be considered for Rate purpose i.e Partial Integration of Taxes, if such income exceeds INR 5000/-

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Teacher Consultant and CA finalist.


Rural Agricultural Land has been specifically excluded from the definition of Capital Asset as defined in Section 2(14). As Rural Agricultural Land is not considered as a Capital Asset – therefore Tax won’t be levied on sale of Rural Agricultural Land as it is only levied on sale of a Capital Asset.

As Rural Agricultural Land does not constitute a Capital Asset, therefore Capital Gains Tax is not levied on the sale of Rural Agricultural Land. This will apply irrespective of the value of the transaction and the capital gains tax on sale of agricultural land will not be levied in any case.


So your all the question has only one answer i.e. you don't need to calculate capital gain tax.

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