Tax related to Lands and Plots

Tax related to Lands/ Plots

Lands and plots purchase are associated with esteem and pride and usually is done by the wealthier segments of the society. Hence, the exemptions and tax benefits available in the case of apartments and houses do not apply to lands. 

But in cases where you build a house on the land, you can avail yourself the tax benefits on loan for the construction of the house.

If you have purchased land which is over the area of 500 sq. meter and it is not used, you are liable to a wealth tax under the Wealth Tax Act, 1957 on the unused land.

Tax Deductions on Agricultural lands-


Section 54B (Exemption on Capital Gains from Land used for Agricultural Activities)

In some cases, capital gains made from the sale of agricultural land may be entirely exempt from income tax or it may not be taxed under the head capital gains.

Tax Exemptions where agricultural lands are involved –

  • Agricultural land in rural India is not a capital asset and any gain on it is not considered as a capital gain.
  • However, for individuals and companies who constantly trade in lands in the course of business, and have capital gains they are taxed under Business and Profession.
  • In case of compulsory acquisition of urban agricultural land are not taxable under Section 10(37) of the Income Tax Act.
  • Short term or Long term capital gain from the transfer of agricultural land by an individual or the individual’s parents or Hindu Undivided Family (HUF) under Section 54B. The exempted amount should be reinvested in new agricultural land within a 2-year period. And the new agricultural land cannot be sold within 3 years of purchase.

If you wish to invest in plots and lands or any real estate and earn good returns, please invest with Parasrampuria Estate Agency. We can help you find the right investment and guide with to maximize gains and minimize risks.

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