Query 1]

I had bought an agriculture land (6 acres) for Rs. 15,000/- in 1987-88 situated in Rural area, 35 kms from Nagpur. Now govt. wants the land for industrial development. It offered Rs. 13 Lacs per acre. I am in Government Service with annual salary of Rs. 6.50 Lacs & in tax bracket of 30%. I don’t have any other income. My queries are

  1. Whether LTCG is applicable for project affected land?

  2. If yes, what are the tax implications there on?

  3. What are the remedies to minimize the taxes?

  4. My uncle posses 5 acre land at same place as ancestral property. Will he be also required to pay LTCG tax? []


Rural Agricultural Land is not a capital assets & income arising from transfer of agricultural land is not at all chargeable to tax as Income from capital gain. Agricultural Land is considered as Rural Agricultural Land if it is not situated:

(a) in any area which is comprised within the jurisdiction of  a municipality (Whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than 10,000 according to the last preceding census of which the relevant figures have been published before the first day of the previous year; or

(b) in any area within such distance, not being more than eight kilometers, from the local limits of any municipality or cantonment board referred to in items (a), as the central Government may, having regard to the extent of, and scope for, urbanization of that area and other relevant consideration, specify in this behalf by notification in the Official Gazette. For Nagpur, the area is notified as 8 Kms.

In short, Profit arising on sale of Rural Agricultural land used for agricultural activity situated 8 Kms beyond the municipal limit or a cantonment board with a population of less than 10,000 would be tax free.

As far as Urban Agricultural Land is concerned, it may be noted that in the case of an Individual/HUF, Capital gain arising on transfer by way of compulsory acquisition of urban agriculture land is exempt from income tax if such compensation is received after 31.03.2004 and the agriculture land was used by the assessee or by any of his parents for agricultural purpose during the 2 years immediately prior to transfer.

The provision would remain the same even on transfer of ancestral agricultural land.


Query 2]

  1. Will the deposits made in the Post Office under senior citizen’s deposits scheme is eligible for the benefit of deduction under Sec 80 C of the income tax ?

  2. Will a senior citizen who will become above 80 years of age during the financial year 2011-2012 having income from only pension and interest from deposits totaling less than Rs. 5,00,000/- during the financial year have to file the return for the Assessment year 2011-12 or 2012-13?

  3. Will the premium on life insurance of sons/daughters (polices taken when they were dependents) qualify for deduction under Sec 80C even after they are no longer dependents? Will this apply to the subscriptions made under Public Provident Funds also? []



  1. Investment in an account under the senior citizens Savings Scheme Rules-2004 & Five year time deposits in an account under the post office Time Deposits Rules-1981 is eligible for deduction u/s 80C.
  2. For the A.Y. 2012-13, the very senior citizen who have attain the age of 80 Years at any time during the year would not be require to file the return of income if his/her total income doesn’t excee Rs. 5 Lacs. (For the A.Y. 2011-12, there is no such category of very senior citizen. They would be require to file the return of income if it exceeds Rs. 2.50 Lacs).
  3. An individual is eligible for deduction U/s 80C towards the LIC premium payment of the policies in the name of son/ Daughter. The deduction is admissible irrespective of the fact that the son/ daughter are no longer dependant on the parents. The deduction is admissible even in respect of the deposit in the PPF A/c of the Son/Daughter.

Query 3]
Can you please enlighten me whether all the educational institutions are compulsorily require to get themselves registere U/s 12AA of the Income Tax Act, 1961 to avail exemption from tax U/s 10 (23C)(iiiab) and 23C(iiiad)? []

An educational institution established for the purpose of education & eligible for deduction u/s U/s 10 (23C)(iiiab) / 10 (23C) (iiiad) are not compulsorily require to get the registration u/s 12AA for exemption of income for which they are otherwise eligible under the say section.


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