What is considered as Rural Agriculture Land under Income Tax for Capital Gain Tax

Income Tax on agriculture land in India and what do we mean by rural agriculture land for calculation of capital gain on agriculture property. Rural Agriculture land is not considered as capital asset as per section 2(14) of the Income Tax Act. Agriculture Income is Exempted from Income as per section 10(1) of Income Tax Act,  Also as per section 10(37) Capital gain to individual/HUF on compensation received on compulsory acquisition of urban agriculture land.

Meaning of Rural agriculture land in India:

  1. It situated in any area which is comprised within the jurisdiction of a municipality ( whether known as a municipality, municipal corporation, notified area committee, town committee or by any other name) and its population should be less than 10,000 as per the last published census, or
  2. If situated outside the limit of municipality, etc., it should be situated certain kilometers away from the local limits of any municipality, etc. as may be specified by the Central government in the official Gazette. The Central government can notified urban land upto maximum 8Kms from the limits of municipality, etc.

Reference: Section 2(14)(iii) of the Income Tax Act

(iii)  agricultural land in India, not being land situate—

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

(b)  in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;

2 thoughts to “What is considered as Rural Agriculture Land under Income Tax for Capital Gain Tax”

  1. Sir, I want to know I had sold my rural agriculture land and it is exepmt now I have to file my ITR so where I will report my exempt profit.

  2. मेरे पास एक पुस्तेनी कृषि भूमि है जिस पर विगत कई वर्षों से कृषि कार्य किया जाता रहा है एवं इसमें अभी भी कृषि कार्य किया जाता है , ये भूमि रायपुर नगरनिगम से बाहर स्थित है, लेकिन ये नगर निगम सीमा से 2-3 किलोमीटर बाहर है , जो कि एक ग्राम है इस ग्राम कि जनसँख्या 10000 से कम है|
    क्या इस भूमि के विक्रय से होने वाले लाभ को पूंजीगत लाभ माना जायेगा या नहीं ?????

    कृपया इस सन्दर्भ में मार्ग दर्शन दे |

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