New Delhi, Aug. 31 -- Is there a way to avoid tax on the sale of inherited agricultural land using the Income-tax Act Section 54? That was the query posed by an individual who, along with his two sisters, inherited agricultural land from his father. He said that they want to sell the land and distribute the proceeds among the three of them.

Assuming the agricultural land is urban agricultural land located within the specified limits of a municipality or cantonment board, depending on its population, Mahesh Nayak, chartered accountant with CNK & Associates, said that capital gains from its sale would not be taxable.

The CA also assumed that the father acquired the land at least two years before the intended sale and that all three siblin...