Income tax on proceeds on sale of agricultural lands

[Srivatsan Krishnamachari]

Dear Learned Friends,

Kindly clarify the following query. As far as I know, sale proceeds received by an Individual on selling agricultural lands are not to be taxed if such lands are situated at more than 8 kilometers from a Municipality having a population of not more than 10,000.It seems there are some changes in respect of the distance and population, brought forth in the recent budget 2014. I hear from some quarters that the distance to be considered is distance by Air and not by road. I will be much obliged if I get this clarified.

Regards,

KS

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have got clarified in the above issue? If not please inform.

AI Summary

Agricultural land sale tax treatment questioned as distance and population criteria and measurement method affect exemption. Whether proceeds from sale of agricultural land are taxable turns on the statutory agricultural land exemption which traditionally exempts gains where the land is located beyond eight kilometres from a municipality with a population not exceeding ten thousand; the query asks whether budget changes altered those criteria and whether distance must be measured by air rather than by road.