Under the Income-tax Act, 2025, the gain arising from the sale of agricultural land in India held for 5…

Under section 2(22)(iii) of the Income-tax Act, 2025 (formerly s.2(14)(iii) of the Income-tax Act, 1961), 'capital asset' does not include agricultural land in India, except land situated within the jurisdiction of a municipality or cantonment board having a population of not less than ten thousand, or within the specified aerial distance from its local limits (two kilometres where the population exceeds ten thousand but not one lakh, six kilometres where it exceeds one lakh but not ten lakh, and eight kilometres where it exceeds ten lakh). Rural agricultural land is therefore not a capital asset, and no capital gain arises on its sale, whatever the period of holding. So it is neither short-term nor long-term capital gain, and it is not partly taxable.