Tax saving on sale of non agricultural land

Dy Manager Logistics

Dear All respected Sir's

We were having ancestor property i.e agricultural land and we sold the same to other party after converting it to NA as it was the requirement of the purchaser.but now we have came to know that we will have to pay Long term capital gain tax on the amt received by such sale.

Now my question is as below

1, Is there any way to save long term capital tax, i.e by invetsting in purchase of bungalow or agriculture land etc.

2, how to calculate the tax

3,what amt to be invested to save tax.

4,I have received cheque on my name direct from purchaser though in the 7/12 of land my name was not there as my father name was there and he is alive.whether i have to pay capital gain tax.


Narendra Patel

Practicing Lawyer

First come first, what do you mean that you converted the Agricultural Land to NA.  Is the land situated in a urban area or within the specified limit of a Notified Area, meaning thereby that it was urban agricultural land.

If it is so, Yes you are liable for Long Term Capital Gain.  It is to calculated as under :

Sales Consideration-Indexed Cost of acqisition=LTCG which is taxable at 20% flat.

You can claim deductions under section 54 either by investing into Long Term Capital Gains Bonds (Upto 50Lac a year) or by investing into a residential property with in 2 years from the date of sale, if you intend to buy a built in house or within 3 years if you wish to construct a house. You may split up the liability between you and your father on the basis of your holding.  It does not make any difference if you have received total consideration in your name.  You can refund part of the consideration belonging to your father to your father.


Dear all respected Sir's,

Thanks for the information. I have one query. I sold a non agricultural land on 17 April  2013 after holding it for more than 4 years. I had booked a flat in early 2009 for which the registration happened on 24 Dec 2009, but got the possession of this flat only in Feb-2013. Can I claim advantage of "reinvesting in house property" to save long term capital gain tax relating to these transactions? As the actual possession date is within specified limit of 1 year before the land sell transaction, Can I claim investment in this flat from the long term capital gain arising from selling of the land? On the Income Tax website, it shows clearly shows that the act of giving possession is treated as transfer for the purpose of Capital Gain.






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