Capital gains

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

24 March 2015 Dear Expert,

plz clarify whether sale of agricultural land on 5-5-2013,for Rs 3000000/-situated within the jurisdiction of municipality(6km away from municipality) consisting population of 7500 ( on 1-1-2013) is chargeable to capital gain taxation or not.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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24 March 2015 http://accommodationtimes.com/income-tax-on-sale-of-agricultural-land/comment-page-1/

Rupesh Jain

Rupesh Jain (Expert)
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24 March 2015 pls see

www.udyogsoftware.com/.../Direct-Tax-Article-Taxation-of-Agricultural...

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Querist : Anonymous

Querist : Anonymous (Querist)

25 March 2015 than q and my doubt is to become an
rural land ,an agricultural land shouldnot come under both s-2(14)(iii)(a) and s-2(14)(iii)(b) or it should not come under any of the -2(14)(iii)(a) and s-2(14)(iii)(b)(i.e if an agricultural land doesnot come under s-2(14)(iii)(a) and comes under s-2(14)(iii)(b)

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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18 July 2024 In India, the taxation of agricultural land depends on whether it qualifies as rural agricultural land or not. Here's a detailed explanation based on your query:

### Classification of Agricultural Land:

1. **Urban Agricultural Land (Section 2(14)(iii)(a))**:
- Land situated in any area within the jurisdiction of a municipality or cantonment board which has a population of not less than 10,000 according to the last preceding census of which the relevant figures have been published before the first day of the previous year.
- This includes any area within such distance, not exceeding 8 kilometers, from the local limits of any municipality or cantonment board referred to above.

2. **Rural Agricultural Land (Section 2(14)(iii)(b))**:
- Land situated in India which is not situated within the jurisdiction of a municipality or cantonment board having a population of 10,000 or more according to the last preceding census.

### Application to Your Case:

- You mentioned that the agricultural land was situated within 6 kilometers from a municipality with a population of 7,500 as of January 1, 2013.
- As per Section 2(14)(iii)(a), agricultural land within 6 kilometers of a municipality with a population of 7,500 would typically fall under the definition of urban agricultural land. This is because it is within the jurisdictional distance limit from a municipality.
- Urban agricultural land is considered as a capital asset under the Income Tax Act and is subject to capital gains tax upon sale.

### Capital Gains Tax on Sale of Urban Agricultural Land:

- **Calculation**: To calculate capital gains, you would typically subtract the indexed cost of acquisition (adjusted for inflation) from the sale consideration received. The resulting amount is taxable as capital gains.
- **Tax Rate**: Long-term capital gains (if the land was held for more than 3 years) are taxed at 20% with indexation benefit. Short-term capital gains (if held for 3 years or less) are taxed at the applicable slab rates based on your total income.

### Conclusion:

Based on the information provided:
- Since the agricultural land is situated within 6 kilometers of a municipality with a population of 7,500, it would likely be classified as urban agricultural land.
- Therefore, the sale of this agricultural land for Rs. 30,00,000 would be subject to capital gains tax under the Income Tax Act.
- It's important to compute the capital gains accurately considering indexed cost of acquisition and other allowable deductions to determine the taxable amount correctly.

For precise tax implications and calculations, it's advisable to consult with a qualified tax professional or chartered accountant who can assess your specific situation and provide tailored advice based on current tax laws and regulations.