Sale of land can result in two kinds of incomes. Classified as a capital asset; Learn whether capital gain is taxable on sale of agricultural land.
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Section 54b provides the exemption from capital gains arising from the transfer of agricultural land. Subject to capital gains tax. If the agricultural land is urban, capital gains tax applies to the sale on 10/12/2024.
As taxpayers prepare for the income tax return (itr) filing in 2025, many are seeking clarity on various aspects of capital gains, particularly concerning agricultural land.
According to the income tax act, rural agricultural land is exempt from capital gains tax when it is sold, provided the land fulfils specific criteria. No capital gains tax arises on its sale or transfer. Stay compliant and optimize your tax liability. Learn how the sale of agricultural land is taxed, key exemptions, rural vs urban classification, and how capital gains are calculated.
Here, we address some frequently asked questions regarding income tax exemptions related to the sale of agricultural land. To qualify as rural agricultural land, the land must be situated outside the jurisdiction of any municipality or cantonment board with a population exceeding 10,000. Not classified as a capital asset; According to the income tax rules, individuals can claim exemption on capital gains arising from urban agricultural land sale.
If the land is held as stock in trade then the sale of such lands results in business income.whereas, if the land is held as investment then the income on the sale of the land results in capital gain.
Understand exemptions, urban vs rural land, and itr form requirements. Understand rules for urban vs rural agricultural land and how to save tax under section 54b. The repurchase on 20/01/2025 has no tax implication as of 19/03/2025, as no subsequent sale has occurred.
