Agricultural land in a nagar panchayat.

Since agriculture is a subject reserved for the states under the Indian Constitution, agricultural income cannot be taxed by the central government but only by the state governments. Agricultural income is, therefore, exempt under income-tax laws. Profit on the sale of agricultural land is also exempt from capital gains under income-tax laws. However, not all gains on sale of agricultural land is exempt and, therefore, one needs to understand the extent of the exemption.