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Regarding sale of agriculture land

09 April 2013

My Friend has an agriiculture land around 15 Acre Rural .. outside the limit of muncipality. He n His father never Show the agriculture income in returns.. Now he want to sell the lands plot wise for farm house purpose ... What are the tax implication Regarding That ... N How he can use his sale proceeds after that. Thank You

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3 Replies

CA Tushar Singhania (Asst. Manager Accts & Fin.) (402 Points)
Replied 09 April 2013

Dear Kritesh,

Agricultural land means land other than the following:

Land situated in any area within the jurisdiction of municipality, municipal corporation, notified area committee, town area committee, town committee, or a cantonment board which has a population of not less than 10,000 according to the figures published before the first day of the previous year based on the last preceding census.
Land situated in any area around the above referred bodies upto a distance of 8 kilometers from the local limits of such bodies as notified by the Central Government .

Hence what you have to check is if the land is 8 KM away from the municipalty then there is no tax implication. If you file a return thendeclare this income as exempt capital gains income. If not then within 3 years you have to buy land worth the profit. this land should be used for agri purposes only (sec 54B). further to claim exemption u/s 54 u have to make sure that the original land was used by the assesee for agri purposes in the immediately preceeding 2 yrs from the date of sale

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Kritesh Tiwari (CFP) (109 Points)
Replied 09 April 2013

Thanks For the Reply

i need futher more details .. as in this case amount of Sale Consideration is huge (like 30lac per Acre)

so it will be in crore if assessee Sold his whole land.

I want to know that as in this case Assesse never Showed his Agriculture income in past years return so what are the implications for that??

And Another one

If suppose he is geting Around 5 crore as a sale consideration. An assesse doesnt want to invest further he just want to keep this as fixed deposit 7 earn interest from there so what are the tax implications???

CA Tushar Singhania (Asst. Manager Accts & Fin.) (402 Points)
Replied 10 April 2013

First find out if his agri land is beyond 8kms of municipal limits. If yes then he doesnt need to show agri income at all, as it is exempt. further if it is beyond 8Kms then there is no need to invest it anywhere. If it is within 8Kms then he'll have to invest in land for 3 years. All that matters is wether the land was used for agri purposes or not. When i mentioned return filling, i meant it for the current year.