Definition of agricultural land

[manoj gupta]

Agricultural land is not a capital asset under the definition of capital assets as defined in the Income TAx Act. It means sale of agricutural land is not liable to capital gain tax. But what is the exact definition of agricultural land for this purpose. What are the conditions to satisfy to avail this exemption. A businesman purchases agricultural land and within 6 months of purchase, sells it on profit. He has never done any agricultural operations on it. Is the capital gain so arising is exempt from tax. or there is condition that he should use this land for at least two years for agricultural purpose to avail the benefit of agricultural land. Can any body tell the circular which defines the city wise boundaries, beyong which any land is termed as agricultural land.

AI Summary

Definition of Agricultural Land Under Income Tax Act: Exemption from Capital Gains Tax Explained A discussion on the definition of agricultural land under the Income Tax Act highlights that agricultural land is not considered a capital asset, thus exempt from capital gains tax. A query was raised about whether selling agricultural land within six months without agricultural use qualifies for this exemption. The response clarifies that agricultural land is defined as land outside municipal areas with a population of at least ten thousand or within eight kilometers of such areas, as specified by the Central Government. For specific boundaries, notification no. 9447 dated 06/01/1994 should be referred to.