Which capital asset is qualified for section 54B exemption?
The exemption under this section can be claimed if the capital gain arises from the transfer of agricultural land. It has been mandated that the agricultural land transferred must be used for agricultural purposes for at least a period of 2 years prior to the date of transfer.
This exemption is solely based upon the fact that the agricultural land is used by the assessee himself or his parents or by HUF irrespective of the ownership of the land. The exemption is allowed irrespective of the fact that the capital gain is arising on the transfer of long-term or short-term capital assets.
Further, the exemption is available only on the transfer of urban agricultural land. Rural agriculture land is not considered as a capital asset and thus it is out of the scope of capital gains tax.