Capital gain on agricultural land

 
Q: Is profit from sale of agricultural land is chargeable?

Ans: Under section 10(37) of Income Tax Act 1957, income would be exempt provided it fulfils following conditions:

• Assessee should be Individual or a Hindu undivided family
• such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2;
• such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his;
• such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India;
• such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004

Also, In case assessee purchases agriclutural land from the proceed of agricultural land, the entire capital gain would be exmpt. He can also choose to deposit it with bank account where there will be lock in period.