Capital tax against sell of parental land
We have sold our parental agricultural land of village BARAH,Block HERNAUT , Nalanda district of BIHAR state in FY13-14. Land registry was done with valuation of 38.54 lakhs but I have recd, money only 23.00 Lakhs as per agreement. I have purchased a flat of 26.54 Lakhs ( FY15-16)in the name of Spouse ( Veena Singh) and got DDA flat in the name of my daughter at 13.19 Lakhs FY15-16.
Due to unaware of knowledge I did not mentioned in my return file
Asked 2 years ago in Property Law from Ramgarh, Jharkhand
1) Capital gain on sale of agriculture land is exempt if land is situated in rural area.and is not capital asset:
2) Land situated in area within municipality or juridiction where population is less than 10000.
3) Where distance of land from municipality and populaiton limit is as under:
Distance from municipality
Within 2 kilometers 10,000 to 1,00,000
2 km to 6 km 1,00,000 to 10,00,000
6 km to 8 km More than 10 lakh
4) capital gain on sale of agriculture land will be applicable when land is capital asset .Section 54B gives relief to a taxpayer who
sells his agricultural land and from the sale proceeds he acquires another agricultural
5) The agricultural land should be used by the individual or his parents for
agricultural purpose at least for a period of two years immediately preceding the
date of transfer
6) Within a period of two years from the date of transfer of old land the taxpayer
should acquire another agricultural land.
7) If a taxpayer purchases new agricultural land to claim exemption under section 54B and
subsequently he transfers the new agricultural land within a period of 3 years from the
date of its acquisition, than the benefit granted under section 54B will be withdrawn
8) In case you are not able to purchase agricultural land before the date of furnishing of your Income Tax Return – the amount of capital gains must be deposited before the date of filing of return in the deposit account in any branch (except rural branch) of a public sector bank or IDBI Bank according to the Capital Gains Account Scheme, 1988. Exemption can be claimed for the amount which is deposited.
1. You can claim tax exemption on the long-term capital gain on the sale of a house. To avail of this exemption, you must use the entire profit to either buy another house within two years or construct one in three years. If you had already bought a second house within a year before selling the first one, you could still avail of the tax exemption.
2. The purchase of property in favour of spouse disqualifies you from claiming tax exemption.
you should mention it in ITR through rectification. you should have invest sell amount in govt bonds or tax saver bond for saving capital gain tax.
You have three years to invest 23 lac in any immovable property from the date of sell. rest of 15 lac is unaccounted money so you should show that you have borrowed that 15 lac from relatives and give that 15 lac to your relatives. It is not necessary that you present any credit bill.
A capital gains tax (CGT) is a tax on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a cost amount that was lower than the amount realized on the sale.
Your case is that you have not mentioned it in the ITR of that year, you can consult your auditor who shall include the same in the next ITR and will arrange to get you refund or pay additional tax accordingly.
I want to mention some specific information about the above land and issue facing now,
1. Land Area- 4.2 Acre, Parental Agriculture Land , Situated in Rural Area of Nalanda ,Bihar. I got this land after division among 5 brothers of family.
I sold the above land in Aug-13 to my Elder Brother's Wife( My Bhabhi) in Rs. 38.54 Lakhs(as per paper) but received only 23 Lakhs due to family transaction. I didn't mention this in the ITR filed for the year.
With the above money and adding some extra in I purchased 26.48 Lakhs Flat in Ramgarh, Jharkhand in July-2015 in the name of My Spouse and DDA flat of Rs. 13.19 Lakhs in June-2015 at Delhi in the name of my Daughter. It amounted total of 39.67 Lakhs.
I got notice from IT department through mail on 28-oct-15 about mismatch of Information in ITR 1/4S filed by me and from source AIR form 61A from District Sub-Registry office, Dist. Registrar, Nalanda, Bihar mentioning that the information filed in ITR doesn't have information about the transfer of property. I had to respond if I have knowledge about this transfer of property or not ?I was given 15-Days time to respond about this mismatch which not responded. Again I got notice on 10-12-2015 with requirement of response till 20th Dec-2015. Which again i didn't responded. From then I got no notice.
I want to add some more information about property transaction done in Aug-12, I purchased 23.5 Dismil of around 23 Lakhs Agriculture Land in a Hethu village of Ranchi District of Jharkhand.
In view of above information and notice from IT department, How should I respond and what should I do to clear this issue with IT department to close the chapter.
Asked 2 years ago
1) you should furnish the information sought by the income tax department
2) since land sold by you is in rural area it would Be exempt from capital gains tax
3) if circle rate of land is 38 lakhs but actual consideration is only 23 lakhs stamp duty payable is as per circle rate
4) further capital gains tax is calculated on the circle rate , however you are not liable to pay capital gains tax as it is in rural area
It becomes your duty to disclose the details of assets bought and sold during the assessment year in the ITR of the AY.
The income tax department are authorised to access to the information about property registration attracting huge transaction in the particular year of an assessee. They cannot be dodged about such transaction nor can the information be suppressed.
You may first give a reply to the notice stating your innocence about the law involved in it and then consult your auditor to involve the transactions in the next ITR.