Does Sale of Agricultural Land Attract Capital Gains Tax?

Are you a stock-in-trade holder of agricultural land? If yes, then I must tell you that any capital gain tax on agricultural land sale is subject to taxation under the heading of "Business & Profession" if you buy and sell it frequently or as part of your line of work. Agricultural land sales may be completely free of income tax or may not be subject to capital gains tax.

Does sale of agricultural land attract capital gains tax?

In rural areas of India, agricultural land is not regarded as a capital asset. Therefore, if you’re wondering is capital gain tax applicable on sale of agricultural land, then let me clarify that any profits from its sale are not subject to capital gains tax. Capital gains on compensation paid for the forcible acquisition of urban agricultural land are excluded from taxation under Section 10(37) of the Income Tax Act.

Is sale of agricultural land exempt from capital gains tax?

Since rural agricultural land is not considered to be a capital asset, there are no capital gains or losses associated with its sale or transfer. A sale or transfer of urban agricultural land will result in capital gains because it qualifies as a capital asset.

1. The number of years the assessee has owned the asset will determine the type of capital gain, such as long-term or short-term.
2. The capital gain is referred to as long-term capital gain if the holding period exceeds two years. The gain is referred to as a short-term capital gain if the holding period is less than two years.
3. While short-term capital gains are taxed at a slab rate, long-term capital gains are subject to a 20% tax rate.

Is agricultural land exempt from capital gains tax?

Particulars	Amount
Full value of the consideration (FVOC)	XXX
Less:- Expenses incurred in connection with transfer	(XXX)
Net Consideration	XXX
Less:- Cost of Acquisition	(XXX)
Less:- Cost of Improvement	(XXX)
Capital Gain/Loss	XXX

I hope this helps you understand capital gain tax on agricultural land sale. Have land to sell? Post a free ad on NoBroker and find buyers in a jiffy. Read More: How to calculate long term capital gain tax on sell of residential plot? Is TDS Applicable on Sale of Agricultural Land? How to Show Sale of Agricultural Land in ITR?