Tell me what is capital gain, how it will plays role in selling an urban agricultural land?

capital gain term related income tax in india.
not going pay role in land sale.

when sell asset own (house, land, shares, mutual fund units, gold, debentures, bonds) , make profit on sale, known capital gain. tax pay on profit called capital gains tax.

if make loss (you sell @ lower price bought it), incur capital loss.

depending on how long held asset, capital gain classified either short-term or long-term.

short-term capital gain: if sell asset within 36 months date of purchase (12 months shares or mutual funds)

long-term capital gain: if sell asset after 36 months date of purchase (12 months shares or mutual funds)

short term capital gain taxed @ 15% current assessment year.

on long-term capital gain (other shares , mutual fund units), more complicated. because inflation taken account. because reduces amount of capital gain , amount end paying tax.

let's mr mani purchased house of rs 2,50,000 (rs 250,000) on june 20, 1996. sells on january 20, 2005, rs 4,50,000 (rs 450,000). since house sold on 36 months after being bought, capital gain long term.

first, calculate cost inflation index. these indices fixed , declared central government every year (see table below). called indexation.

cost inflation index:
index of year sold / index of year bought
2004-05 index / 1996-97 index
480/305 = 1.57377

indexed cost of acquisition
= buying cost x cii
= 250000 x 1.57377
= 3,93,443

long term capital gain
= selling price � indexed cost
= 4,50,000 � 3,93,443
= rs 56,547

tax payable 20% of rs 56,547 ie rs 11,310. (plus surcharge of 10% if applicable)

agricultural land if u sell , invest in agricultural land there no requirement capital gain.


1.not agricultural land tax free . while sale of "rural agricultural land" tax free ;"urban" agricultural land not tax free. , should know when agricultural land " urban" in nature. defined in section 2(14)(iii) follows :

"agricultural land in india, not being land situated-

(a) in area comprised within jurisdiction of municipality (whether known municipality, municipal corporation, notified area committee, town area committee, town committee, or other name) or cantonment board , has population of not less ten thousand according last preceding census of relevant figures have been published before first day of previous year; or

(b) in area within such distance, not being more 8 kilometres, local limits of municipality or cantonment board ..."

so, if see land agricultural land , sale proceeds non taxable.

should collect information show land in question agricultural , situated beyond limit , given above in definition . attach same along deed of conveyance return of income , in rest ever. remember , transacting cheques great evidence of genuineness of transaction. should .

2. second point remember , necessary if land in question not agricultural . question of capital gain comes play . , should know value adopted stamp valuation authority can taken sales consideration if same more value of sales shown you.this on account of section 50c of t act introduced fy 2002-03 .

on case , should know other ways of saving taxes on capital gain given in t act.this way if becomes taxable, can still save on tax , shall free of -so called hassles perceived you. section 54b provided scheme save capital gains tax on sale of agricultural land subject capital gain tax. further section 54ec , 54f provides relief if invest in bond or residential house per conditions set in respective provisions of t act.

i planning sell land firm / industry, taxes applicable , levies

Business & Finance Renting & Real Estate Next