Ans: Gain from transfer of agriculture land situated in rural area is not subject to tax.

Ans: Agricultural land in Rural Area in India (as defined by the Income Tax Act) is not considered a capital asset. Therefore, any gains from its sale are not taxable.If agricultural land is not in a Rural Area it is taxed as any other capital asset.

Ans: Person is required to pay tax on transfer of capital asset and land being captal asset will be considered as transferred when substantial rights in a asset is transferred. From the facts, it is understood that only advance is received and no rights are transferred.