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Business News/ Money / Personal Finance/  ITR filing: Do I need to show the profits made on sale of agricultural land?

Any profit made on Sale of an agricultural land is exempt as it is not a capital asset.  Do I need to show the profits made on sale of agricultural land in the Income Tax Return (ITR) form? This is not appearing in the Annual Information Statement (AIS)  and  no tax has been deducted at source for the compulsory acquisition made by NHAI .Request your advice.

Each and every land used for agricultural purpose is not treated as agricultural land for the purpose of income tax laws. It is only the agricultural land which is situated outside the local limits of municipalities and towns depending on the population of the city/town and distance from the city or town limits which is treated as agricultural land. 

So in case your agricultural land falls within the definition of agricultural land as per income tax laws, the same is not treated as capital asset for taxation purpose. Since this is not a capital asset for capital gains purposes, any profits made on sale/transfer of it is also not an income under the income tax laws and therefore is not required to be disclosed in the ITR anywhere. 

Please understand that there is difference between a receipt not being an income and the same being an exempt income under the tax laws. So agricultural income is an exempt income whereas any profits made on sale of agricultural land, which is not a capital asset, is not an income at all for tax purpose. 

So the agricultural income is required to be disclosed in the ITR and is required to be taken into account for arriving at the average rate of tax applicable to you whereas any profit made on sale such agricultural land is not required to be disclosed in the ITR.

Balwant Jain is a tax and investment expert and can be reached on and @jainbalwant on Twitter.


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Updated: 30 Jul 2022, 06:49 AM IST
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