Tax liabilities on sale of agriculture land

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

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.