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.

[CAGOPALJI AGRAWAL]

Section 2(14)(iii) defines the agricutural land as under: 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 according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;] See notification no. 9447 dated 06/01/1994 for notified area. For notification click the link below: https://www.taxtmi.com/notifications?id=22008

AI Summary

Agricultural land exclusion clarifies which rural parcels are not treated as capital assets and thus not liable to capital gains. Agricultural land is excluded from the definition of capital asset for income tax purposes; land situated within certain municipal or cantonment jurisdictions or within proximate areas specified by the Central Government by notification does not qualify as agricultural land, and such notified areas are determined having regard to urbanisation and other relevant considerations.