Capital gains. capital asset.
Raghu ponnala
(Querist) 18 July 2013
This query is : Resolved
hi
I own a agriculture land of 10 acres which is 14km from the nearest Municipality. But now HMDA (HYDERABAD METROPOLITAN DEVELOPMENT AUTHORITY) had notified our village under Maheshwaram mandal rangareddy district under HMDA Limits by G.O.Ms.No.33,dt:24.01.2013
by andhra pradesh government.
Now my question is if i am going sell my agriculture land i am exempt from capital gains or not.
Does my agriculture land comes under capital asset or not. because it is 14k from the nearest municipality.
DILIP KUMAR AAGARWAL
(Expert) 20 July 2013
Onec agricultural land is notified by the Govt., it is no more a agricultural land. it became capital asset and it is liable for capital gain tax.
R.V.RAO
(Expert) 22 February 2014
Dear sri Raghu,Ponnala garu,
Agriculture land in India, not being land which is situated within the local limits of any municipality, notified area committee, town committee or a cantonment board and which has population of not less than 10,000 or which is situated in any area up to a distance of 8 KM from such limits or up to such distance from such limits as specified in notification No.10(E) dated 06-01-1994, do not come under the purview of capital asset. Hence, it is totally exempted (subject to above conditions).
SINCE VILLAGES IN MAHESWARAM MANDALAM R.R.Dt. ARE WITHIN NOTIFIED AREA ,THEY ARE NOT AGR.LANDS.
it is then urban land, subject to capital gain.
as far as taxing agr.lands as capital gains,pl. see details below.
Capital gain on rural land is not taxable.however agricultural land in urban area is taxable.
condition for that according to sec 54B under head of capital gain of income tax act,1961
1.land has been transfer by the individual not by HUF
2.Transfer of agricultural land can be after or before three 3years of acquisition but land must be used by the possessor or parents at least for two years before transfer takes place.
3.assessee must purchase the another agricultural land (rural or urban) within a period of 2years after the date of transfer of the original agricultural land to be used forr Africalateral purpose.
4.in case fo compulsorily acquisition of urban agricu;ltural land is exempt as per condition of sec10(37).
5.quantum amount allowed for deduction
(a) if the amount of capital gain is equal to or less than the cost of new agricultural land,he entire capital gain is exempt.
(b)if the amount of capital gain is greater than the cost of the new agricultural land,the cot of new agricultural land is allowed for exemption.
source: www.in.answers.yahoo.com
