How to save Income Tax on Long Term Capital Gain (LTCG) arising on Sale of Agricultural Land ?

Normally Salaried and other Tax-payee (Assessee) claim the Income which they gain from Sale of Agricultural produce. But they did not know that how to save Income Tax on Income of the sale of Agricultural Land (urban area) and how to claim exemption from Income Tax. Tax on long term capital gain arising on sale of agricultural land (urban Area) can be saved by claiming an exemption u/s. 54B or U/s. 54F or U/s. 54EC. The Classification of u/s. 54B or U/s. 54F or U/s. 54EC as under:

Exemption Under Section 54B:
The main stipulations incorporated in section 54B are as under: -
  • Capital gain arises on transfer of Agricultural Land.
  • The Agricultural Land is used by the tax payer or his parents for agricultural purpose for a period of two years immediately preceding the date of transfer.
  • The taxpayers has purchased another land for agricultural purposes within a period of two years from the date of transfer.
Exemption Under Section 54EC:
To save tax u/s 54EC, One can invest the amount of LTCG in the Specified bonds REC/ NHAI within a period of 6 months from the date of transfer.

Exemption Under Section 54F:
For exemption u/s 54F, subject to various other terms / stipulations, you have to invest the amount of net sale consideration for purchase of a residential house property within a prescribed period.