Taxation for unemployed individuals below 60 and below taxable limit

[The Lone Crusader]

What is the best way to invest capital gains obtained by the sale of old ancestral agricultural land for someone who is below the taxable income? If the estimated interest income from investing the entire amount plus other existing FD incomes for FY 2025-26 exceeds 4 lakhs (but is still well below 12 lakhs), is this income taxable?

 

[TaxWiser]

What is the best way to invest capital gains obtained by the sale of old ancestral agricultural land for someone who is below the taxable income? If the estimated interest income from investing the entire amount plus other existing FD incomes for FY 2025-26 exceeds 4 lakhs (but is still well below 12 lakhs), is this income taxable?

Is Your Land Sale Taxable?​

It depends on whether the land is rural or urban:

Rural agricultural land → No capital gains tax because it’s not considered a capital asset.​

Urban agricultural land → Taxable capital gains, so you might have to pay tax.​

Ways to Invest & Save Tax​

If the land is taxable, you can reduce your tax liability by:

• Buying another agricultural land within 2 years (Section 54B) → No tax!
• Investing in NHAI or REC bonds within 6 months (Section 54EC) → Tax exemption!
• Buying a residential house (Section 54F) → Tax benefit if you don’t own another house!

Is Your Interest Income Taxable?​

Your estimated interest income from FD + other sources for FY 2025-26 is around ₹4 lakhs but below ₹12 lakhs. Under the new tax regime, incomes up to ₹12L get a ₹60,000 rebate, which can reduce your tax significantly. BUT this rebate does not apply to capital gains, so they need separate calculation.

FD Interest Taxation Rules​

• If total income exceeds ₹4 lakh, FD interest becomes taxable (as per slabs: 5% for ₹4L-8L, 10% for ₹8L-12L).
• TDS on FD Interest: Banks deduct 10% tax if interest exceeds ₹50,000 unless you submit Form 15G/15H stating your income is below taxable limits.

For a detailed explanation and personalized tax calculation, using AI or consulting a tax expert can help you optimize your investments and tax savings.

(Source: TaxConcept, Personal Experience, Summarized Using Samsung Note Assist)