Will I have to pay tax on selling an agricultural plot gifted by my mother?

I am a 43-year-old businessman. About 10 months ago, my mother gifted me an agricultural plot that I am now going to sell for Rs 60 lakh. Will I have to pay any tax on this transaction?

Archit Gupta CEO, ClearTax replies: Capital gains tax is paid on gains made on the sale of a capital asset. Generally, agricultural land is not considered a capital asset and, therefore, its sale does not attract capital gains tax. However, if the land you hold is located within eight kilometres of a municipality, municipal corporation or cantonment board with a population of at least 10,000, this land will be treated as capital asset and you will have to pay capital gains tax. To calculate capital gains, the price at which your mother purchased this land will be considered as its cost price. Further, if the land has been held for more than two years from its date of purchase, it will be considered a long-term capital asset, allowing you to claim the benefit of indexation. Indexation adjusts the cost for inflation during the holding period, leading to reduced gains and, thus, reduced tax.

Can pensioners claim the recently introduced Rs 40,000 standard deduction? Can they claim the deduction for assessment year 2017-18?

Amit Maheshwari Partner, Ashok Maheshwary and Associates replies: The standard deduction of Rs 40,000 is available for income from salary. So, if the pension is received from one's former employer, it would be eligible for a standard deduction of Rs 40,000. But only from the current financial year. It cannot be claimed for assessment year 2017-18.




Ask our experts

Have a question for the experts? etwealth@timesgroup.com