Tax liabilities on sale of agriculture land

Income Tax Income from Capital Gains
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1

Could you please help me what is the tax liabilities for sale of agriculture land.
Thanks

2

Hi @angrejsim

Section 54B of the Income Tax Act, 1962, provides relief to individuals who sell their agricultural land and buy another agricultural land from that sale, subject to a few conditions as stated below.

  • This benefit can only be claimed by individuals or HUF.

  • The agricultural land must be used specifically for agricultural purposes.

  • The individual or his/her parents must use this land for agricultural purpose for at least two years immediately preceding the date on which the exchange of land occurred. In the case of HUF, any member of the HUF must use this land for agricultural purpose.

  • After selling agricultural land, the assessee will have to buy another agricultural land within two years from the date of selling.

  • In case of compulsory acquisition, the period of acquiring new agricultural land will be assessed from the date of receipt of compensation.

  • The entire amount of capital gains must be utilized for the purchase of agricultural land if not then the difference will be termed as capital gains and the tax will be computed accordingly.

  • The new agricultural land must not be sold within the period of 3 years from the purchase.

Also, here’s a complete guide on capital gains on sale of agricultural land.

3

It assessess sales of agriculture land urban value rs:15 lacs transformation f.y.22-23.but assessess purchase transaction f.y.15-16 not reported in it returns and accounting records entry passed.
Question:
Assessess sales transaction it returns show compulsory or not compulsory f.y.22-23.

4

Hi @Sundaraiah_Kollipara,

As per the IT Act, it is compulsory to report a sale of agricultural land while filing ITR, irrespective of whether purchase entry was reported or not.

Hope it helps.

5

Hi Team,

I am a salaried person and own ancestral land (in remote Village).

recently i sold 1 acers of land for 12.5 lks and leased some for the same amount for 30 years lease.

my question is

  1. Sale - Sale of land comes under exempt income however i have to show while filling the return.
  2. Lease - 30 years lease, i should show all agriculture income in one shot or can i divide the amount and show for 30 years.

Thanks,

6

Hi @Alex

The sale of land is exempt from tax, you can show it in your ITR.
And, the lease is similar to rent, you have to show lease rentals every year as and when received.

7

Hi,

I was reading this thread and you have mentioned that

The sale of land is exempt from tax, you can show it in your ITR.

How is it exempt in this case ? Please clarify if possible.

8

I bought the farm land in 2018
So I have sold that farm land now in the current financial Year so will I have to pay tax on it?
Do I need to pay an advance income tax?
Can someone please guide me on this

9

Hi @Shiro_Patil,

Yes, you’ll need to pay tax on the sale of your farmland depending on its location:

  1. Rural Agricultural Land: No capital gains tax.
  2. Urban Agricultural Land: Subject to long-term capital gains tax (since you held it for more than two years). If you’ve sold the land after 23rd July 2024, you have the choice to pay tax at the rate of 12.5% without indexation benefit or 20% with indexation. If the land was sold before that, 20% tax with indexation will be applicable.

If your total tax liability exceeds ₹10,000, you’ll also have to pay advance tax to avoid penalties. For capital gains, advance tax needs to be paid in the Quarter in which you have actually realised the gains.

Here’s a detailed read on how you can calculate and pay advance tax: Advance Tax: Eligibility, calculations and due dates

Hope this helps, let me know if you need any further clarifications.