Taxability on Conversion of Inheritance Agri. land to Non agri and sale.

As far I know deduction under section 54 is allowed to anyone only if he sale one and purchase another agricultural land but you have made transfer to non agricultural land which is considered transfer under income tax act hence taxable event is when you had transfer your agricultural land to non agriculture land.

No capital gain arises at the time the conversion of Agri land into non-Agri takes place.

As and when sale of plots take place that time long term capital gain arises .

June 2019 will be sale date for Rs 5 lakhs.

Cost of acquisition will be taken at prevailing price as of 1-4-2001 and then indexation plus cost of conversion from Agri to NA.

Sale value 5 lakhs minus ( indexed cost + conversion cost ) will be taxable as LTCG

Agri income will be tax free and will be considered only for income tax rate purposes.

But LTCG will not be treated as Agri Income.