Upgrad LLM

short term capital gain on sale on agrilcutural land


Respected Sirs,

1]One year back we have sold agricultural land in maharashtra (after 7 years) & invested the money 83% in purchase of residential property & 17% in purchase of agriculture land. The land which is purchased is not in municipal limit & population is also less than 10000. We have shown this sale and purchase in our IT return and so the tax on it was nil.

2]Now after more than one year but less than three years, we wanted to sale that agriculture land & invest it again in new agricutural land. This I think will be a short term capital gain.

3]Do we need to pay income tax on it even after investment in another agricultural land?

Please advice.

 
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Practicing Lawyer

In case you have availed benefit of exemption u/s 54 from the Long Term Capital Gains at the time of sale of original Land by investing into another Land, You are required to hold such land for three years. If You fail to hold such new assets for three years and sell/transfer before that period,the exemption originally allowed shall be withdrawn and you will be required to pay Long Term Capital Gain Tax in the year in which original Capita arised.  Sale of new asset before the expiry of three years would also amount to short term capital gain on which you would be liable to discharge your tax liability as per law.

 
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