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Ask The Tax Expert

Capital Gain Exemptions on Agricultural Land per Section 54B

Thank you for writing in to us. Below is the answer to your query.

                                                             
Question: Is it necessary to invest only in agricultural land if capital gain is being occurred by sell of agricultural land.

                                                                  
Answer: Unfortunately, yes. As per section 54B of the Income Tax Act, 1961, in case the property sold was used for agricultural purposes only, for at least 2 years before the date of its sale, the long term capital gains arising from the same will have to be used for purchase of another agricultural land only within 2 years from the date of sale of original property in order to avail capital gains exemption on the same.

                                 

Warm Regards,

Expert @ TaxYogi

Published Aug 02 2010




Comments

Comments

 

Gyan said:

I am afraid this information is wrong.

The investment is very much possible in Residential Property.

Agriculture Land: agriculture land in rural area is not covered in definition of Capital asset hence no capital gain is applicable in case of sale of agriculture land in rural area .However capital gain tax is applicable if land is situated in urban area.

Investment in Agriculture Land:yes you are correct that reinvestment in agriculture land can save tax on capital gain but there are some conditions to it ,as given in section 54 B of the income Tax act

Investment in commercial property will not give you any exemption /deduction from capital gain.

Investment In Residential property : with Investment in residential property you can save tax u/s 54 F .But not same as agriculture land can .the difference between both the option are that in case of section 54 B (Investment in agriculture land) the amount to be invested only the amount of capital gain but in case section 54 F (investment in new residential house) net sale proceed is to be invested in the new Residential house.

February 10, 2011 11:19 PM
 

vivek nanda said:

gyan is right .

February 20, 2011 1:43 PM
 

jigar s shah c.a. said:

if i sold shop commercial of rs.20,00,000/- and i want to purchase agricultural land against capital tax on commerical shop then can i purchase agricultural land and also can 3 part of land i purchase against capital tax

March 15, 2011 1:07 AM
 

amit moradabad said:

my father has an ancestor agricultural land now which comes in urban area and now we want to sale it plot wise. in present the circle rate of that land is rs.1200/ sq. meter and in 1981 there is no fix agriculture rate of that land , an approx stamp is purchase on the basis of sale price now the question is that is any capital tax charge on it if yes than how can we calculate capital gain.          

June 23, 2011 2:42 AM
 

amit moradabad said:

my father has an ancestor agricultural land now which comes in urban area and now we want to sale it plot wise. in present the circle rate of that land is rs.1200/ sq. meter and in 1981 there is no fix agriculture rate of that land , an approx stamp is purchase on the basis of sale price now the question is that is any capital tax charge on it if yes than how can we calculate capital gain.          

June 23, 2011 2:42 AM
 

Prakash Shah said:

whether the new agriculture land should be out side the urban Area?

August 15, 2011 10:26 AM

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