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Tax on agricultural income

Harendra Kumar (Tax Advisor ) (1326 Points)

11 January 2016

Dear Sir,

When a farmer sold their land and received the consideration amount regarding sold land. Such amount is taxable or exempt. And TDS deducted on such amount. Please guide to us step by step in this regard..

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3 Replies

Mayur Kashinpure (Student) (341 Points)
Replied 11 January 2016

Originally posted by : Harendra Kumar
	Dear Sir, When a farmer sold their land and received the consideration amount regarding sold land. Such amount is taxable or exempt. And TDS deducted on such amount. Please guide to us step by step in this regard..

Taxability in your case depends upon nature of land. Agricultural land in rural area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains.
If such agricultural land in not in rural Area, capital gains shall arise & TDS shall be deducted u/s 194IA @ 1% of the consideration payable to a resident transferor if a valid PAN is provided by the seller; if not, then TDS will be deducted @ 20%.

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Harendra Kumar (Tax Advisor ) (1326 Points)
Replied 11 January 2016

Thanking you Sir,

If I have the PAN and TDS deducted @ 20% and also such land distance i.e. 8 k.m. from Nagar Nigam. And there is working the Gram Panchayat. Can I claim whole amount of the TDS. If I can do then how? Your earlier reply in this regard higher appreciated.

Mayur Kashinpure (Student) (341 Points)
Replied 11 January 2016

Originally posted by : Harendra Kumar
	Thanking you Sir, If I have the PAN and TDS deducted @ 20% and also such land distance i.e. 8 k.m. from Nagar Nigam. And there is working the Gram Panchayat. Can I claim whole amount of the TDS. If I can do then how? Your earlier reply in this regard higher appreciated.

If such land is within the local limits of municipality as defined in 2(14), it is a capital asset and therefore tax is chargable. Liability to deduct TDS is of the buyer. So, if you are a buyer, you need to deduct TDS @ 1% of the consideration payable to a resident transferor if a valid PAN is provided by the seller; if not, then TDS will be deducted @ 20%. TDS will be claimed by the seller.

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