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Avinash Patil (Sr. TL)     16 September 2013

Tax applicable on the sale of inherited agricultural land

Hello Sir/Madam,

My father along with my uncle and aunts inherited the agricultural land from my grand father. The agricultural land was purchased by my grand father before year 1980 in Amravati district of Maharashtra. My father along with my uncle and aunts sold the property in 2009. The amount was equally shared amongst everybody.

It will be a great help if you could help/guide me on following points

1] If the capital gain tax is applicable on this transaction?

2] If yes, then will that be equally shared among all 5 persons?

3] My father did not invest the amount to any other facility as the financial situation at that was not good. My father invested major portion of amount in fixed deposit giving returns on monthly basis. Will this be considered as investment against the tax liabality for this tax?

 

Thanks & Regards

Avinash Patil



Learning

 2 Replies

Ms.Nirmala P.Rao (CEO)     24 September 2013

Dear Client,

               Regarding your Queries (1) and (2) you'd be taxed as follows: If the amount of the capital gain is greater than the cost of the new asset if any, purchased or reinvested by you unless otherwise than in  the acquisition of agricultural land or residential property for self occupation  of HUF etc  then the difference between the amount of capital gain and the  cost of the new asset  shall be charged to income tax as per Section 45 as  income of the previous year.  If the cost of the new assert is greater than the amount of capital gain  you/HUF would not be liable to any tax at all.However, if the agricultural land is a rural agricultural land there would not be any capital gains tax at all.Regarding your question no. 3, interest on fixed deposits etc is exempt from tax u/s 10(15)(i) of IT Act 1961

 

Ms.Nirmala P.Rao

Legal Expert.

Ms.Nirmala P.Rao (CEO)     24 September 2013

Dear Client,

 

            Sorry!   Interest Income on   Fixed Deposits is taxable and can be deducted at source by the Bank. Only interest income on Savings Deposits  is exempt from tax up to Rs.10,000.

 

Ms.Nirmala P.Rao


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