Agriculture land sold to agricultural industry, Will it get capital gain tax or Income tax?

[Amit Kunjir]

Group of farmers have decided to sale 44acres of land to agri industry. This land is 8km away from city limits (aerial distance) and the population of village is less than 100000. Farming is carried out since 10years. Will they be liable for any tax as they sell the land to industry?

[Amit Kunjir]

The population is less than 10000 (ten thousand)

[Amit Kunjir]

The land is near pune, maharashtra

[Ganeshan Kalyani]

Sir, the extract of the definition of capital assets is reproduced below for ready reference:

(14) [“capital asset” means-

(a) property of any kind held by an assessee, whether or not connected with his business or profession;

(b) any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992, [15 of 1992.]but does not include-

(i) .......

(ii)....

(iii) agricultural land in India, not being land situate-

(a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand [***] ; or

(b) in any area within the distance, measured aerially,-

(I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or

(II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or

(III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.

Explanation.-For the purposes of this sub-clause, “population” means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year.

Thanks

AI Summary

Agricultural land classification determines capital gains tax exposure based on municipal population and specified aerial distance criteria. Tax characterization of proceeds from sale of farmland depends on whether the land is excluded from the capital asset definition: agricultural land is exempt from capital asset treatment unless situated within specified municipal jurisdictions or within prescribed aerial distances from municipal limits tied to population bands; if the land falls within those limits it is not treated as exempt agricultural land for capital gains purposes.