Is Agri-agricultural land sale taxable in India?
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.
Is gain on sale of agricultural land taxable?
When there is profit in sale of land it is called Capital Gain and if there is loss in sale it is called Capital Loss. You have to pay tax on your Capital Gains and your Capital Loss can be used to set off only Capital Gain of that year and can be carried forward also. Gain on sale of Agricultural Land is not taxable.
Is rural agriculture land taxable under Income Tax Act?
Rural Agriculture Land: Rural agriculture land is not considered as a capital assets under the Income Tax Act, 1961 and is not taxable under the Income Tax Act, 1961. The first and foremost thing to understand is the definition U/s 2 (14) of the Income Tax Act, 1961.
Is agricultural land considered a capital asset in India?
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. For details on what defines an agricultural land in a rural area. Do you hold agricultural land as stock-in-trade?
Is there tax on sale of agricultural land in India?
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.
How can we show sale of agricultural land in income tax?
The exemption u/s 54B is available in respect of capital gains arising from transfer of agricultural land. This exemption is available when capital gain arising on sale of urban agriculture land & such capital gain is used for another agriculture land.
How can I avoid capital gains tax on agricultural land?
Exemption under section 54B can be claimed in respect of capital gains arising on transfer of capital asset, being agricultural land (may be long-term or short-term). This benefit is available only to an individual or a HUF. The land should be used for agricultural purpose at least for two years.
Do we need to show sale of agricultural land in ITR?
Since the profits on sale of agricultural land situated in rural area is not an income taxable under the income tax laws, you have no obligation to disclose it at all. So you need not to disclose the same in your income tax return.
Is agriculture land sale taxable?
As Rural Agricultural Land does not constitute a Capital Asset, therefore Capital Gains Tax is not levied on the sale of Rural Agricultural Land. This will apply irrespective of the value of the transaction and the capital gains tax on sale of agricultural land will not be levied in any case.
Is sale of agricultural land exempt?
Amount of exemption from Capital Gains u/s 54B– If cost of new Agricultural Land is equal or greater than capital gains, then entire capital gains is exempt. Moreover, if cost of new Agricultural Land is less than capital gains, capital gains to the extent of thecost of new agricultural land is exempt.
Is TDS applicable on sale of agricultural land?
The purchaser of any immovable property is required to deduct tax at source (TDS) @1% if the consideration for such purchase exceeds Rs 50,00,000. However, no TDS is required to be deducted if the property purchased is agricultural land.
Can agricultural land be sold in cash?
28 April 2020 Since you are the purchaser and Agricultural Land is non-depreciable asset, there is no problem of yours and you can purchase the land by paying cash.
How can I avoid capital gains tax on land sale in India?
By Investing in Capital Gains Account Scheme And in your return claim this as an exemption from your capital gains, you don’t have to pay tax on it. However, you must invest this money you have deposited within the period specified by the bank, if you fail to do so, your deposit shall be treated as capital gains.
Where do you declare sale of agricultural land in ITR?
02 August 2011 It should be shown under exemt income. As if you show it as income from agriculture, then it will be added in income for rate purposes and the term Agricultural Income does not include the proceeds from sale of agricultural land.
How much agricultural income is tax free?
Agricultural income is not taxable under Section 10 (1) of the Income Tax Act as it is not counted as a part of an individual’s total income. However, the state government can levy tax on agricultural income if the amount exceeds Rs. 5,000 per year.
How much is capital gains tax on agricultural land?
Agricultural land would qualify for the non-residential rate of CGT, i.e. 10% or 20% depending on the owner’s level of income. If sold as a business, the taxpayer may be able to qualify for Business Asset Disposal Relief (described above) in order to pay a tax rate of 10%.
Classification of Agriculture Land In India
In India, there are two categories of agricultural land: rural and urban agricultural land, according to the Income Tax Act.
Urban Agricultural Land
The term “Urban Agricultural Land” refers to land that is used for agricultural purposes and is located in a specific place. It is not the same as rural land.
Taxability of sale of Agricultural Land in India
Land sales can generate two types of revenue. If the land is held as a stock in trade, the money from its sale is considered business income. However, if the land is held as an investment, the income from its sale is considered as Capital Gain.
Capital Gain Tax Exemptions
Under section 54B, there is a provision to claim capital gain exemption on the sale of urban agricultural land for investment in other agricultural lands. However, there are certain conditions that the claimant needs to satisfy, which are as follows:
