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Need to pay capital gains on non-rural agricultural land developed as housing layout

Is capital gains applicable when a farmer develops his ancestral agricultural land into a housing layout through an area-sharing joint-development agreement with a developer? If yes, how is it calculated and what are the reliefs available?

– Manu Mark Imam

If the agricultural land under question falls within the definition of rural agricultural land, i.e., falls within the specified limits of the nearest municipal authorities, then it is not considered a capital asset and developing the land into housing layout via area-sharing join-development agreement with a developer will not lead to any capital gains in the hands of farmer. However, if it doesn’t qualify as a rural agricultural land, then it will lead to capital gain in the hands of farmers and such gain shall be taxed in the year in which the completion certificate of the building constructed is received and the stamp duty value of the share of the land and building received by him plus any other monetary consideration as on the date of receipt of completion certificate shall be considered the full value of consideration and the resultant gain shall be taxed as long term capital gains at 20% after applying indexation on cost of the land.

I am a retired employee, having income from pension , interest, rentals , housing loans. While details of pension and my investment in PPF is reflected in Form 16, other details are furnished by us in our returns separately. How would we do the new dispensation?

—Devinder Marwah

Since you haven’t mentioned about the dispensation, we are assuming that you are asking about the dispensation regarding standard deduction of Rs 40,000. You can claim the same in your ITR even if it is not mentioned in your Form 16. However, if you mean to ask about something else, we would need more information.

I joined a company in November 2018 and my earning till March 2019 is less than Rs 5 lakh and my employer has not deducted any tax and not given Form 16. Can I file my returns without it?


Yes, you can file your returns without Form 16. Use other documents like payslips to compute your income and furnish the information in your tax return accordingly.


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