Tax applicable on selling of agricultural land in India
As Rural Agricultural Land does not constitute a Capital Asset, therefore Capital Gains Tax is not levied on the sale of Rural Agricultural Land. This will apply irrespective of the value of the transaction and the capital gains tax on sale of agricultural land will not be levied in any case.
Is selling of agricultural land taxable in India?
Agricultural land in Rural Area in India is not considered a capital asset. Therefore any gains from its sale are not taxable under the head Capital Gains.
Is capital gain tax applicable on sale of agricultural land?
A Rural agricultural land does not qualify to be a capital asset, hence no capital gains/loss arise on sale or transfer of rural agricultural land. An urban agricultural land qualifies to be a capital asset, hence capital gains shall arise on sale or transfer of urban agricultural land.
How can I avoid capital gains tax on agricultural land?
If the agricultural land is sold within a period of 3 years from the date of its purchase, then at the time of computation of capital gain arising on transfer of the new land, the amount of capital gain claimed as exemption under section 54B will be deducted from the cost of acquisition of the new agricultural land.
How can we show sale of agricultural land in income tax?
Since the profits on sale of agricultural land situated in rural area is not an income taxable under the income tax laws, you have no obligation to disclose it at all. So you need not to disclose the same in your income tax return. You can use ITR 1 for this year also.
How can I avoid capital gains tax on land sale in India?
By Investing in Capital Gains Account Scheme
And in your return claim this as an exemption from your capital gains, you don’t have to pay tax on it. However, you must invest this money you have deposited within the period specified by the bank, if you fail to do so, your deposit shall be treated as capital gains.
Is TDS applicable on sale of agricultural land?
The purchaser of any immovable property is required to deduct tax at source (TDS) @1% if the consideration for such purchase exceeds Rs 50,00,000. However, no TDS is required to be deducted if the property purchased is agricultural land.
Do we need to show sale of agricultural land in ITR?
Proceeds from sale of rural agriculture land is exempt from tax as rural agriculture land is not a capital asset. You need to file ITR-2 and show the entire proceeds under the “Schedule EI” under point 4.
How do I calculate capital gains on sale of land?
LTCG = Sale price – Indexed cost. 3000000 – 2130000= 870000. The tax on LTCG is 20%. In this situation, the tax will be 20% of 8,70,000.
Can agricultural land be sold in cash?
28 April 2020 Since you are the purchaser and Agricultural Land is non-depreciable asset, there is no problem of yours and you can purchase the land by paying cash.
How much agricultural income is tax free?
Agricultural income is not taxable under Section 10 (1) of the Income Tax Act as it is not counted as a part of an individual’s total income. However, the state government can levy tax on agricultural income if the amount exceeds Rs. 5,000 per year.
Is agricultural land inheritance tax free?
Inheriting a farmhouse can be done free of inheritance tax if it qualifies for IHT agricultural property relief. The relief applies to the agricultural value of the agricultural property so on inheriting a farmhouse IHT relief of up to 100% can apply.
Is agriculture tax free in India?
As per section 10(1), agricultural income earned by the taxpayer in India is exempt from tax. Agricultural income is defined under section 2(1A) of the Income-tax Act.
Do farmers have to pay tax?
No, only agriculture income from land situated in India is exempt from tax.
Is agriculture exempt from GST?
Agriculture is outside the gamut of tax framework in India for both direct and indirect tax. Tax experts said that seeds are exempt under the GST law and the agricultural produce from seeds or services in relation to agricultural produce are also exempt from GST.
How is agricultural income tax calculated?
Calculate tax on basic exemption limit + agricultural income i.e.
But, you might have to pay some tax on agriculture income in certain cases.
| Particulars | Amount |
|---|---|
| Tax on Rs 2,50,000 | Nil |
| Tax on next Rs 2,50,000 @ 5% | 12,500 |
| Tax on remaining Rs 5,00,000 @ 20% | 100000 |
| Total Tax | 112500 |
Which income is tax free in India?
✅What is the amount of tax-free income? According to new and old tax regimes, an individuals income below ₹ 2.50 Lakh is exempted from tax. However, you can claim tax rebate on income upto ₹ 5 Lakh and make it tax free.
What income is tax free?
As per income tax laws, filing income tax returns is mandatory for individuals whose total income during the financial year exceeds the exemption limit of more than the gross total income of ₹2,50,000.
What is the proof of agricultural income?
In respect of agricultural income, the indicative list of documents may be pertaining to land acquisition or ownership, details and location as per municipal records, evidence of agricultural use, lease agreement, tenant details, rent receipts, bank statements (if rent was received through modes other than cash).
Is it mandatory to file ITR for agriculture income?
If the aggregate agricultural income of the assessee is up to Rs. 5,000 disclose the agricultural income in the income tax return (ITR) 1. But if the agricultural income exceeds Rs. 5,000, then form ITR 2 applies.
What is section 10 exemption in income tax?
Section 10 of the Income Tax Act covers many allowances such as Leave Travel Allowance, Uniform Allowance, Travelling Allowance, House Rent Allowance and some more. However, some special allowances that are exempt fall under Section 10 (14).
What is CEA exemption?
Children Education Allowance: If you are receiving children education allowance from your employer then you are eligible to claim a tax exemption under the Income-tax Act. However, the maximum amount exempted is Rs. 100 per month or Rs. 1200 per annum for a maximum of up to 2 children.
What is the maximum exemption under section 10?
Section 10 (10C) VRS Compensation
Under the voluntary retirement scheme, the compensation that is received at the time of retirement is exempted to a maximum limit of INR 5 lakhs.
How can I save tax?
Save Income Tax on Salary
- Deductions under Section 80C, Section 80CCC and Section 80CCD. Citizens of India can save tax under these 3 sections. …
- Medical Expenses. …
- Home Loan. …
- Education Loan. …
- Shares and Mutual Funds. …
- Long Term Capital Gains. …
- Sale of Equity Shares. …
- Donations.
What is income tax with exemption and without exemption?
Income tax exemptions are provided on particular sources of income and not on the total income. It can also mean that you do not have to pay any tax for income coming from that source. For example, income from agriculture is exempted under tax.