This article explains about when an agriculture land will be considered as the capital asset. I already written article about the Capital Gains and Agriculture Land, it doesn’t explain much about the restrictions involved in finding the agriculture land is Capital asset or not?. This article main focus is to explain how you can decide if it will fall under the capital asset. Please post your comments after reading the article. If you like the article please subscribe it here.
When Agriculture Land is Capital Asset?
This section puts down few points to be consider while deciding whether a particular agriculture land is capital asset or not. Lets look into the key factors determining the capital asset.
- If the specified land is situated within the municipality limit which has the population of above 10000.
- If the specified land is situated with in 8 kms of the municipality limit.
- Any agriculture land situated in a village which is not comprised within a municipality or town area will not be treated as a capital asset.
- 10000 people includes the entire municipality. Not the single village.
Summary
I hope this article clears the doubts on how to determine the agriculture land whether it is rural or urban agriculture land. For learning about the capital gains on agriculture land read my previous article Capital Gains and Agriculture Land. If you have any doubts please post it in the comments section.
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November 14, 2009 at 3:24 am
Sir If Agricultural land sold by a company also the tax treatment is same or not. Pl clarify
December 28, 2009 at 3:08 am
Sir, If there was no agricultural activity involved 2 yrs prior to the purchase of land ,then on sale of the same is it liable to capital gain tax.It meets all the other criteria as given.your opinion would be very helpful.thanx. Praveen
February 18, 2010 at 12:05 am
Sir,
My Father inherited agricultural land 25 years back (prior to 1981) from my grandfather. The value of this land is approx Rs. 900000=00 as per government record on January, 2010.
My father has applied for NA and wish to sell it to a company for Rs. 1900000=00 (Rupees nineteen lakhs only)
I have been to three CA and the opinion of all differs and I am worried about being charged under LTCG for the extra Rs.1000000=oo we are getting above the government record. There is no such type to get the Fair Market Value as people do not sell at prevailing market rate whereas we are selling to a limited company and the payment terms are by 100% cheque only.
I would appriciate your views on this and if Rs.10.00 lakhs that we are getting over and above the government record is invested in buying any agricultural land, can we be saved from paying LTCG?
Please answer.
Thanks
Harish
May 25, 2010 at 3:56 am
Hi,
I have purchased an agricultural land in 2006 for Rs. 18 Lakhs. The land is not in municipal Limit and there is no agricultural activity on the land. I intend to sell the same at Rs. 50 Lakhs. Do I have to pay Long Term Capital Tax or am I fully exempted from tax. Can I invest the same in acquiring a small flat or shop. I already own a flat in my name.
May 25, 2010 at 4:09 am
I have an agriculture land in Village Nandgaon district Raigad. I have purchased it 2006 for Rs. 5 Lakhs. The land is not in municipal Limit but has a panchayat. The document of the land were registered at __________. There is no agricultural activity on the land. I have built a house on this land in this current year. I intend to sell the same at Rs. 75 Lakhs. Do I have to pay Long Term Capital Tax or am I fully exempted from tax. Am I allowed to acquire apartment in foreign land through the sale proceeds under Long Term Capital gain
February 8, 2011 at 9:08 am
well, sir i want to clarify on agriculture land.I have an agricultural land doing farming for last 30years,but falling under Muncipality area as well as population more than 100000 as per Capital gains Tax libility.We want to dispose off the said land & would like to invest the profit again in some agricultural land .
Can you please guide me would the Capital gain tax liable to me or some exemption under any law for such agricultural land.
October 14, 2012 at 1:20 am
pl give reply
March 28, 2011 at 8:51 am
Sir
Agriculture land in rural area was sold by our Private limited company 1. Whether this gain amount should be shown in profit and loss account or not
2. Whether it attracts MAT tax or not
kindly advice with elaboration
Thanking you
March 28, 2011 at 8:51 am
Sir
Agriculture land in rural area was sold by our Private limited company 1. Whether this gain amount should be shown in profit and loss account or not
2. Whether it attracts MAT tax or not
kindly advice with elaboration
Thanking you
May 16, 2011 at 9:31 am
We.four brothers inherited agricultural in 1970 and have been cultivating the land for mango and chikoo fruits and for other crops in bewteen the mango and chikoo trees until now. We now want to sale this land to an Industrial Company.The intending purchasers propose to buy our land for bonafide industrial use as provided under the Bombay Agricultural and Tenancy Act 1948 and Bombay Revenue Act 1879 although they are not Agriculturists.
Now my question is whether our land can be classified as not Capital Asset under the Capital Gain Tax Act? and
Do we have to pay Capital Gains tax on sale by way of Tax Deduction at Source?
May 16, 2011 at 9:48 am
Regarding my query above please that note our land/orchard is situated in a small village having population of less than 10000 and is not situated within any Municipality Area.
June 25, 2011 at 12:00 am
I think the there is not a blanket condition of falling within 8 kms. of municipal limits. It varies with cities and linking roads.
December 7, 2011 at 12:08 am
i had purchased some agriciltur land before seven years and wish to sell this today , and wish to know that if the capital gain will be charged on the profit if yes then what will be the ratio
December 14, 2011 at 4:45 am
well, sir i want to clarify on agriculture land.I have an agricultural land doing farming for last 30years,but falling under Muncipality area as well as population more than 100000 as per Capital gains Tax libility.We want to dispose off the said land & would like to invest the profit again in some agricultural land .
Can you please guide me would the Capital gain tax liable to me or some exemption under any law for such agricultural land.
December 22, 2011 at 11:47 pm
I have agricultural land in village popularity is 4ooo, which land I get NA and then sale it to seprate customers. Then when I am liable to capital gains
June 19, 2012 at 11:34 pm
Does this mean that an agriculture land situated in an urban area is a capital asset?
June 20, 2012 at 12:12 am
Hi Garima,
It is not always. The area should have been notified by the government under the municipality. This is normally 8 KM from the city. In some case the area could be less than 8 Km. So, we can not roughly use the term Urban here.
Thanks,
Krishna
June 20, 2012 at 11:33 pm
Pls tell me whether I am getting it right. A land can be an agricultural land if:
1. such land is situated within a municipality or within the limits of a municipality which has a population of more than 10,000 as per the latest census, or:
2. such land is situated within 8 kms of the above specified municipality or the limits of such municipality.
June 21, 2012 at 2:02 am
Yes. Garima . You are correct. But, you have to check if the area is in the notified list, otherwise that will not be a capital asset. For further details, please read my latest article:
http://www.thinkplaninvest.com/2012/06/agriculture-land-capital-gains/
Thanks,
Krishna
June 21, 2012 at 3:24 am
This means that even after falling in any of the above two conditions, the land should be notified by the govt. to be an agricultural land. Right? And from where can the notification be checked?
June 21, 2012 at 3:40 am
Hello Garima,
Yes. It has to be notified to be under the municipality limit. If it is not notified, then it is agricultural land.
The govt.issued notification No 9447 dated 6-1-1994
http://www.box.com/s/5e0eb8304befe6843185
Thanks,
Krishna
June 21, 2012 at 4:00 am
Thank you for the clarifications..
June 21, 2012 at 5:39 am
Keep reading this blog
Thanks,
Krishna
June 25, 2012 at 9:38 pm
Whether the agri land being sold is ” Capital Asset ” or not will be clear if one refers the Central Govt notified Annexture A along with the Gazette of India Extra Ordinary ( Part – I I ) Section 3 ( I I ) Ministry of Finance ( Department of Revenue ), New Delhi Dated 6 Jan 1994 ( Income Tax Notification No. 9447 ). This Notification / Schedule is available on Internet- relevant website. You will have to read this notification very closely and carefully. If your land’s location is not listed on the Notification / schedule that means that your agri land is not ” Capital Asset ” and hence you have no tax liability on the gain you make on its sale.
June 26, 2012 at 8:39 am
Hello Pravin G Desai,
Thank you for the explanation. I have written details on my another article:
http://www.thinkplaninvest.com/2012/06/agriculture-land-capital-gains/
Thanks,
Krishna
June 30, 2012 at 7:45 pm
We sold an ancestral property ( building with 12 flats & 9shops) within the municipal limits in Maharashtra. I have 1/11 share.
I already have a residential house on my name ( not in the same municipal limits)
Will buying an agricultural land provide me a tax rebate to capital gains?
August 18, 2012 at 5:14 pm
WHAT IF AGRICULTURAL LAND IS NOT USED FOR AGRICULTURAL PURPOSES FOR A PERIOD OF MORE THAN 2 YEARS BEFORE THE DATE OF TRANSFER. WHAT WILL BE THE CAPITAL GAINS PROVISIONS IN THAT CASE
October 14, 2012 at 1:22 am
well, sir i want to clarify on agriculture land.I have an agricultural land doing farming for last 30years,but falling under Muncipality area as well as population more than 100000 as per Capital gains Tax libility.We want to dispose off the said land & would like to invest the profit again in some agricultural land .
Can you please guide me would the Capital gain tax liable to me or some exemption under any law for such agricultural land.
November 25, 2012 at 2:58 pm
I have sold agri land which is not a capital asset, while filling IT return what is required to prove that it falls in rural area.
Regards