Sec.2 (14)

[KALAYAN SINGH ADHIKARI]

Sir,

I am a govt. servant. I am paying income tax and filed income tax return.

I have a ancestral agricultural land in rural area which is 1o km far from manciple area. In the year 2009 I sold a piece of this land sum of Rs. 16.3 Lakh. In this regard, I have to need to some quarry.

Whether I have to pay income tax on this sale? or exempted?

Whether I have to show this amount in income tax return?

If I have to pay income tax, up to what amount?

It is, therefore, requested that kindly inform me.

Thank u very much.

 

KS ADHIKARI

AI Summary

Rural agricultural land not treated as capital asset may be exempt from capital gains tax, subject to use and development.
Sale of rural agricultural land located about ten kilometres from a municipal area is generally not a capital asset and thus not taxable as capital gains if the land was agricultural and used as such; the taxpayer must establish rural location and agricultural use. If the assessing officer considers the land part of a development or conversion for sale, gains may be taxed as business income at normal rates. Exempt amounts should be shown accordingly; if taxable as capital gains, compute long term capital gains using a fair market value benchmark and cost inflation indexation.