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No Exemption u/s 10 on Urban Agricultural Land – Explanation 1 to Section 2(1A)

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June 5, 2021

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4 mins read

No Exemption u/s 10 on Urban Agricultural Land – Explanation 1 to Section 2(1A)

While agricultural income is exempt from income-tax under Section 10(1) , Explanation 1 to Section 2(1A) , clarifies that capital gains arising from urban agricultural land would not be treated as agricultural income, and would this   be chargeable to tax under Section 45.

Assets not considered as Capital Asset – Bonds

The following bonds would not  be considered as a Capital Asset : –

  1. Specified Gold Bonds : – 6½% Gold Bonds, 1977, or 7% Gold Bonds, 1980, or National Defence Bonds
  2. Special Bearer Bonds, 1991 issued by the Central Government;
  3. Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 or deposit certificates issued under the Gold Monetisation Scheme, 2015 notified by the Central Government .

Capital Assets

Items Capital asset Reason
Stock-in-trade, Consumable stores, Raw material No Excluded from definition of capital asset .
Movable property held for personal use [Wearing apparel, home furniture, etc ) No It would be Personal Effects
Rural Agricultural land No Excluded from definition of capital asset
Gold deposit bonds
6 .5% Gold bonds
7% Gold bonds
National Defence Bonds
Special bearer bonds
No Excluded from definition of capital asset
Land held for personal use Yes Only movable property is treated as personal effect. Land  is immovable property .

 

Urban agricultural land Yes Only rural agricultural land is excluded from the definition of capital asset

 

Jewellery
Archaelogical collections
Drawings
Paintings and sculptures
Any work of art
Yes Excluded from the definition of Personal Effects

 

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Arinjay Jain

Bio of author

Arinjay is a Chartered Accountant with more than 20 years of post-qualification experience. He worked as Director, in the M&A Tax Division at KPMG in India. Presently, he is advising several MNCs in UAE on Economic Substance Regulations and impact of the UAE Corporate Tax Law on their business and clients across globe on International Tax issues . He is a well recognised Trainer of International Tax and UAE Corporate Tax. The areas of service include the following : - Advise and Compliance relating to International Tax Issues; Advise relating to UAE Corporate Tax Issues; Advise and Compliance relating to UAE Economic Substance Regulations; Advise and Compliance relating to Indian Income Tax Issues; Other connected matters from a Regulatory perspective.

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