Section 54B-Tax on capital gains
PROFIT ON SALE OF LAND IS RS 15000000, PROFIT AFTER TAKING THE EFFECT OF SEC 50C IS RS 22000000, AMOUNT INVESTED U/S 54B IS RS 21000000, WHETHER EXEMPTION AVAILABLE WOULD BE RS 21000000 OR WOULD BE LIMITED TO RS 15000000.
Section 54B provides exemption on capital gains from the transfer of land used for agricultural purpose.
Amount of Exemption - If the amount of capital gains is less than the cost of the new agricultural land, the entire amount of capital gains is exempt. On the other hand if the amount of capital gains is greater than the cost of the new agricultural land, the difference between the amount of capital gains and the cost of new land is chargeable to tax as capital gains.
Taking your doubts in consideration the taxable amount will be:
|Profit after taking section 50C||22,00,000|
|Amount Invested in new agriculture land||21,00,000|
|Gains exempted (Lower of profit or amount invested)||21,00,000|
In your case the exemption will be available for Rs. 21,00,000.
As pulkit told the exemption u/s 54 B is available towards the amount of investment in land & hence the total exemption available will be Rs.21 Lakhs. According to section 50C you need to compute the amount of sale consideration based on guideline value of land. Hence the Computation will be as under:
Profit on land (Guideline value) Rs.22,00,000/-
Less: Exempt u/s 54B (Investment in land) Rs.21,00,000/-
Long Term capital Gain 1,00,000/-
Note: Exemption u/s 54B is available towards investment in agricultural land only.