1. Agricultural land (situated in rural area) acquired through inheritance from my deceased father sold off and registration completed after getting the consideration money through RTGS. Kindly advise what is my tax liability regarding capital gains. I am not sure how to arrive at indexed cost of acquisition as the land was purchased by my father during 1954.
2. If no tax is to be paid, then how to show in ITR Form the amount of income to be exempted.
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Tax on sale of agricultural land
Replies (6)
Rural Agricultural land is not a capital asset, as per Section - 2 (14) of Income-tax Act, 1961 as follows:
| 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;]] |
So sell of any agricultural land situated beyond the specified boundries as above, is tax-exempt.
Thanks, but the consideration money received is to be shown as "income from other sources". Then how to show this amount as exempted income in EI schedule of ITR Form?
If it qualifies 'Rural Agricultural Land', then any gain over its transfer is tax exempt, which may be declared under schedule 'EI'. It is never declared under 'Income from other sources.'
Thanks Mr Rambhia for your considered views. This means that the entire consideration money is to be recorded in EI as capital gains is difficult to derive in absence of cost of acquisition of this property purchased by my father in '54.
Though it doesn't affect in any manner, but as per rule only gain should be declared. If circle rate of the area in 2001 is known from sub-registrar office, it can be roughly estimated.
Got it. Doubts cleared. Thanks again for your prompt response.
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