Section 10(37) Exemption towards Capital Gain arising on Compulsory Acquisition of Urban Agricultural Land

Section 10(37) Exemption Towards Capital Gain Arising on Compulsory Acquisition of Urban Agricultural Land

Provisions of section 10(37) of the Income Tax Act lays down certain conditions which need to be satisfied in order to avail exemption towards capital gain arising on account of compulsory acquisition of an urban agricultural land.

The present article tries to explain the said exemption provisions of section 10(37).

Conditions for availing exemption under section 10(37)

The exemption under section 10(37) is available only on account of compulsory acquisition of urban agricultural land. However, all the following conditions are mandatorily required to be satisfied, in order to claim an exemption under section 10(37) of the Income Tax Act–

1. An exemption under section 10(37) is available only to an individual or a Hindu Undivided Family.

2. The exemption is available towards capital gain arisen on the transfer of agricultural land.

3. The said agricultural land should be situated within the area mentioned below-

• • The agricultural land should be situated within the jurisdiction of a municipality; municipal corporation; notified area committee or town area committee or town committee having a population of more than 10,000; or
  • The agricultural land should be situated within the following distance, measured aerially-

4. The said agricultural land should have been used, for a period of two years immediately before the date of transfer, for the agricultural purpose by-

• • An individual or his parent; or
  • A Hindu Undivided Family.

5. The transfer of capital gain is on account compulsory acquisition under any law or the transfer consideration for which is determined / approved by the Central Government or the Reserve Bank of India.

6. The consideration or compensation from the transfer should have been received on or after 1^st April 2004.

In case all the above conditions are fulfilled, the capital gain arising on compulsory acquisition of an urban agricultural land would be exempted under section 10(37) of the Income Tax Act.

Amount of exemption available under section 10(37)

If all the above mentioned conditions are satisfied, entire capital gain arising on transfer of urban agricultural land is exempted under section 10(37). There is no maximum limit prescribed under the law.

Table – Articles on Section 10 Exemptions