Is capital gains tax payable on agricultural land?
Agricultural land would qualify for the non-residential rate of CGT, i.e. 10% or 20% depending on the owner’s level of income. If sold as a business, the taxpayer may be able to qualify for Business Asset Disposal Relief (described above) in order to pay a tax rate of 10%.
How can I avoid capital gains tax on agricultural land?
Exemption under section 54B can be claimed in respect of capital gains arising on transfer of capital asset, being agricultural land (may be long-term or short-term). This benefit is available only to an individual or a HUF. The land should be used for agricultural purpose at least for two years.
How do you calculate capital gains on sale of ancestral agricultural land?
Cost of acquisition x Cost inflation index of the year in which the land is transferred/CII of the year in which the land was acquired. Long-term capital gains = Sale amount – Indexed cost of acquisition.
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 sale 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 land exempt from capital gains tax?
All land which qualifies for inheritance tax agricultural property relief, whether at 100 per cent or 50 per cent, can be given away, for example to the next generation, without liability to capital gains tax being incurred.
Can agricultural land be purchased 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.
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.
How do I avoid capital gains tax on ancestral property?
If gains are more than Rs. 2 crores the inheritor can reinvest in one property to claim the exemption of tax. These investments are to be made within the specified time limits that are one year prior to the sale or two years from the sale or within three years for an under-construction property.
Is agricultural land a capital asset?
For a business, a capital asset provides services over the life of the asset and is not a normal product of the business. Land, machinery, tile, grain bins, buildings, and breeding livestock are all examples of capital assets for a farm.
Do I need to pay tax if I sell my land?
Capital Gains Tax on Sale of Land In the case of STCG, the profits generated in the process of selling land is included in the taxable income of the owner and he/she has to pay taxes depending on the income tax slab they fall in for that particular financial year. For LTCG, the current tax rate is 20%.
How much is capital gains tax on land?
Capital Gains Tax is charged at 10 per cent and 20 per cent on gains that are not ‘upper rate gains’. The rates are 18 per cent and 28 per cent where the gains are ‘upper rate gains’. Gains on the disposals of interests in residential property are upper rate gains.