ITR Filing: Do I need to show profit on sale of agricultural land?

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

So if your agricultural land comes under the definition of agricultural land as per income tax laws, it is not treated as a capital asset for taxation purpose. Since it is not a capital asset for capital gains purposes, any gain made on its sale/transfer is also not income under Income Tax laws and hence is not required to be disclosed ITR anywhere.

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

so agriculture revenue This is required to be disclosed in the ITR and needs to be taken into account to arrive at the average rate of tax applicable to you, whereas any profit made on the sale of such agricultural land need not be disclosed in the ITR.

Balwant Jain is a Tax and Investment Specialist and can be contacted here jainbalwant@gmail.com and @jainbalwant on Twitter.

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