Exemption u/s 54B - Capital Gains - Urban Agriculture Land

• Section 54B of the Income Tax Act 1961, contains exemptions relating to transfer of urban agriculture land.

• This exemption is only available to Individuals and HUFs.

• Where in any previous year, the assessee transfers agriculture land which was used by him or his parents for agricultural purposes for 2 years immediately preceding the date on which transfer took place and the assessee purchases rural or urban agriculture land within a period of 2 years from the date of transfer, then the assessee is eligible for exemption under this section.

• The capital gain on transfer of agriculture land can be short term or long term.

• Amount of exemption: The amount of capital gains which is exempt shall be lower of the capital gain amount, being long term or short term and the cost of land purchased.

• The provisions relating to CGAS Scheme and Lock in period are the same as prescribed in section 54 of the Act.

• The provisions of this section are applicable only on sale of urban agriculture land as a rural agriculture land is not considered as a capital asset as given in the definition of capital asset under section 2(14) of the Act.