Capital Gains tax on agricultural land

[NANDKUMAR SAGWEKAR]

Dear All learned readers and members of the site

I am having two  querry about capital gain tax  : -

1. The agricultural land owned by assesee and now he is selling to another party  for Rs. 18 Lakhs  the land is located within a village which is 4 kms. outside the boundry of muncipal  area . The date on which assessee become owner of land is 01-Mar-1970. The muncipality is not notified in the circular for limits of 8 kms / 5 kms , whether assessee is liable to pay the capital gain tax ?

2. The agricultural land owned by assesee and now he is selling to another party  for Rs. 48 Lakhs  the land is located within  the boundry of muncipal  area . The date on which assessee become owner of land is 26-July-1978. In this case how to find out fair market value of the land on 01-04-1981 for indexation purpose.

Thanks

 

A M SHEMBEKAR

[CAGOPALJI AGRAWAL]

The fair market value as at 01/04/1981 can be taken from the regd valuer certificate.

You have to ascertain that the land is outside the specified area of municipal limits. The area would either be outside the specified limit or not and no in between sitation might be assumed.

[NANDKUMAR SAGWEKAR]

Thank you very much for the reply.

 

ANAND SHEMBEKAR

CELL 9421187122

[DALJITSINGH CHHABRA]

Your both querries pertain to Capital Gains tax on sale of agricultural land. Firstly you have to acertain whether this sale is taxable or exempted keeping in view the distance of agricultural land under reference to notification No.  Income Tax - F.No. 164/3/87-ITA.I (9447) - IT - dated - 06-01-1994 . If the same is out side the distance mentioned therein, the sale of land under reference will be non taxable. For the pupose you have to obtain required distence certificate from revenue authorities.

 

Next for calculating the capital gains on sale , please acertain market value as on 31-3-1981 which can be had from revenue authorities on Farad hakikat giving value of land as on 31-03-1981 .

 

Thirdly you can buy the agricultural land within two year provided the land sold was being cultivate from minimum las two years.

[NANDKUMAR SAGWEKAR]

Thank you very much sir DALJIT SINGH CHHABRA for your valuable guidance as well as giving the link of respective

Income tax circular.

 

Thanks

 

A M SHEMBEKAR

 

AI Summary

Capital gains on agricultural land: proximity to municipal limits determines taxability; obtain distance and valuation evidence. Capital gains on sale of agricultural land hinge on whether the land lies within the specified area around municipal limits under the income tax notification; a distance certificate from revenue authorities is required to establish taxability. For indexation, fair market value as of 01 04 1981 may be proved by a registered valuer's certificate or contemporary revenue records (Farad/Hakikat). Practical steps include obtaining the distance certificate and documentary valuation evidence, and considering replacement land purchase relief when statutory cultivation and time conditions are met.