| Question And Answer | |
|---|---|
| Subject: | Sale of rural agricultural land |
| Category: | Income-Tax |
| Querist: | Dhaval S |
| Answered by: | Advocate Shashi Ashok Bekal |
| Tags: | Agricultural Income, Agricultural land, conversion |
| Date: | November 21, 2022 |
Rural agricultural land has been held as such since last 10 years and agriculture activity carried upon. During the previous year the said land was converted to NA and then immediately sold within 3 months. Whether the conversion or sale thereof will attract Income tax. Is the exemption for rural agricultural land still available post conversion to NA? if taxable, then Capital gains or business? )this is a one only transaction, the assessed is retired sr citizen.
There will be no tax on conversion of agricultural land to non-agricultural land. However, the sale of non-agricultural, being a capital asset, would attract capital gains (business income if the assessee is engaged in real estate business). The fair market value of the agricultural land on the date of conversion and the cost incurred for conversion will be allowed as an expense.
There are some decisions to hold that-Rural agricultural land converted for non-agricultural purposes but factually continued to be used for agriculture is not a capital asset in spite of conversion