LCI Learning

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Ravi (Manager)     09 March 2013

Capital gain tax


Dear All respected Sir's
My wife and me are farmers. We have purchased a agricultural land in February 2008 and selling it now in April 2013. As per the requirement of the purchaser, we have converted the use of the land as industrial NA (Non Agricultural Land) in February 2011. The land is situated in a rural area and outside the specified limit of a Notified area, meaning thereby that it is a rural agricultural land. Now as per the IT law if the land is agricultural and outside specified limit there is no tax (capital gain or otherwide) to be paid. But as we have converted into NA use, please let me know whether the sale preceding will attract any taxes. If it attracts any taxes, is there any way to save the tax, i.e by investing in purchase of bungalow or agriculture land.


 6 Replies

R RAJAGOPALAN (ADVOCATE)     10 March 2013

From the facts given in your Query, it appears-

1. you are actually using the land for agricultural purposes;

2. You actually continue to do cultivation in the plot.

3. In the Revenue records, you have changed its character, into non-agricultural land.

If it is shown in the revenue records and in the Sale Deed about to be executed & registered, as Non-Agricultural, the I.T.authorities will consider it as only agricultural land.

On the other hand, if you can forcefully prove as a fact that it has all along been, and is being used  used  only for agricultural purposes, andit has never been used for any non-agricultural purposes, you will get the benefit at least in the appellate stage.

Ravi (Manager)     12 March 2013


Thank you very much for your reply. 
Request to clarify few points - 
1. per your reply "If it is shown in the revenue records and in the Sale Deed about to be executed & registered, as Non-Agricultural, the I.T.authorities will consider it as only agricultural land." - Is there a typing mistake, do you want to say " .....  the I.T.authorities will consider it as Non-agricultural land only"?
2. Though revenue record has changed as NA land, we have been using it as agriculture land only and have not used for any non-agricultural activity. In this case, after the sale, should we file the returns considering it as agricultural land used for agricultural activity only?
Thanks and regards,

girish nanji shejpal (self practising)     17 March 2013

Dear Sir,

                 IF You converted your Agriculture land into Non Agri-Culture Land It meas you paid All Stam Duety and an procedural fee to revrnue office, now you are land is not use for any Agricultural cultivation or use it mean you have to pay Gram-Panchayat Tax or If land is in Nager Parisad Area you have to pay N.P. Tax for your convinient now if you use As Agricultural activity you are not liable to claim into Income tax under Agriculture land Income because now it is Non Agricultural Land & You Have to pay Capital Gain As per Cost Index .......

R RAJAGOPALAN (ADVOCATE)     17 March 2013

The Revenue records have persuasive force. But if the seller had in fact  used the land for agricultural purposes, and it can be proved, the seller has a strong case to claim that the land was in fact agricultural.


Change of Revenue Record  indicates you are not using the land for Agricultural purposes.  Therefore you cann't claim any Exemption while buying another agricurture land.  Plan for a Capital gain tax

R RAJAGOPALAN (ADVOCATE)     17 March 2013

Whether the land was being actually used for agricultural purposes, is a question of fact.

Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register