Is Investment In Agricultural Land A Good Idea?

Agricultural land is a considerably better option for real estate investment due to several factors. Read on to know why.

 Investing In Agricultural Land
  • Understanding the benefits of investing in agricultural land.
  • Simple details and documents associated with investing in agricultural land.
  • What are the different tax rules associated with investing in agricultural land in rural and urban areas?

There are several ways in which people invest their money to create funds and also get good returns. Lately, a number of investors and brokers are showing an interest in investment in agricultural land.

In this article, we will focus on all the details necessary for such an investment. This includes tax rules, benefits, and other factors.

Investment in Agricultural Land

Numerous urban investors in India expect potential returns from different types of property for agriculture that are situated in suburban areas of prominent cities. Because of the increasing prices of land in typically urban areas and its shortage, the market has witnessed a rising demand for these types of farmlands.

Benefits of Investing in Agricultural Land

  • If you don't farm, you can rent the whole land to a certified farmer and get a rent or charge every year. 
  • Agricultural land can produce long-term benefits if the government develops infrastructure on such real estate.
  • Investing resources into agricultural land not only saves you from investing in infrastructure but also lets you use the land for various other purposes in the future.

Also Read: 7 Things To Know Before Investing In Land

Documents Needed for Investing in Agricultural Land

  1. Stamp duty: Paid according to the order and legislation of the state where the land is located.
  2. Title deed: This document is expected to look at the credibility of the dealer and establish legal ownership.
  3. Registration: Contains the agreement between a buyer and seller when the property is sold.
  4. Power of attorney: When following up in the interest of the vendor.
  5. Encumbrance certificate: A report that ensures that a property is free of any legal or financial disputes.
  6. Land measurement certificate: A declaration expressing that the land estimations are according to the information referenced in the title deed.

What are the Tax Rules?

If you hold rural land, it doesn't qualify as a capital resource. So, no capital increases emerge on the transfer or sale of rural agricultural land. On the other hand, urban agricultural land qualifies as a capital resource, and capital gains arise on its sale or transfer.

The nature of both long-term and short-term capital gains will rely upon the holding time of the resource. If you hold the land for over 2 years, it will be viewed as a long-term capital gain and be taxable further at 20%. Finally, if the holding period is under 2 years, the gain will be a short-term capital gain and available at the existing piece rate.

Also Read: Do You Need To Pay Tax On Compensation Received For Land Acquired By Government?

Investors and brokers suggest putting resources into agricultural land as it is a protected and trustworthy spot for investment. This is because land usually yields bigger returns than other resources and gives investors tremendous financial security above all elseHowever, it's important to carefully understand all these simple details before you make this kind of investment.

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Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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