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CS Executive · Tax Laws and Practice · Capital Gains

Under the Income-tax Act, 2025 (applicable from the June 2027 session), a Hindu undivided family transfers land that its karta used for agricultural purposes in the two years before the transfer. Which of the following correctly describes the condition for the capital gain to be not charged to tax as per the official text of section 83?

The gain is not charged if the individual or HUF buys other land for agricultural use within two years after the transfer. The original land must have been used for agriculture in the two years before transfer. Other periods, such as six months, relate to different provisions.

  1. AThe HUF must purchase other land for agricultural use within two years after the date of transferCorrect
  2. BThe HUF must purchase any residential house within two years after the date of transfer
  3. CThe HUF must purchase other agricultural land within one year before the date of transfer only
  4. DThe HUF must purchase other agricultural land within six months after the date of transfer

Explanation

Section 83 applies to an individual or HUF with gains on land used for agriculture by the assessee or a parent or the HUF in the two years before transfer. The assessee must purchase other land for agricultural use within two years after the transfer. A six-month window belongs to the NRI foreign exchange asset provision, not this section.

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