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
Population
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
land.
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date of its acquisition, than the benefit granted under section 54B will be withdrawn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.