Capital gains: Amaravati farmers get Budget bonanza

Union Finance Minister Arun Jaitley today gave a bonanza to thousands of farmers in Andhra Pradesh's new capital region Amaravati by waiving off the capital gains tax on sale of their developed land.
The farmers, who contributed 32,221 acres under the LPS (land pooling scheme) for construction of Amaravati, are expected to get a financial benefit of a minimum of Rs 500 crore due to exemption of capital gains tax, according to preliminary estimates prepared by the AP Capital Region Development Authority (CRDA).
Speculators and realty developers, who purchased huge tracts of land in the region to cash in on the demand following the announcement of the capital and eventually pooled it to the CRDA, may, however, not be able to derive the tax benefit as Jaitley stipulated that it would be available only to those who owned lands as on June 2, 2014, the day AP was formally divided and Telangana came into existence.

For the record, 25,614 'farmers' in 29 villages that form part of Amaravati contributed 32,221 acres of land for the capital under the LPS.
But hundreds of acres had actually gone out of the farmers' hands by the time the LPS was announced as realtors and speculators went on a buying spree to make a fast buck.
As many as 20,306 transactions took place and 9,231 acres oflandwas sold, in some cases multiple times, between June 2, 2014 and March 6, 2016 in the Amaravati region.

Amaravati was notified as the state's new Capital region on September 3, 2014. Between June 2 (when the state was bifurcated) and September 3, 2014, about 604 transactions took place and 515 acres oflandwas sold.

Between September 4 and December 8, 2014 when thelandpoolingpolicy for the Capital was announced, 1756 transactions were recorded wherein 1724 acres was sold.
Between December 9, 2014 and March 6, 2016, 9304 transactions happened and 6,573 acres oflandwas sold. In all, 20,306 transactions happened and 9,231 acres changed hands in the capital region, as per government records.
When he visited Amaravati on October 28 last year, to lay the foundation stone for construction of Government's administrative buildings, Jaitley termed as unprecedented the act of farmers in Amaravati region giving away their lands under the LPS for the capital development.
"We (state and Centre) will together bring smiles on each of these faces," the Finance Minister told the farmers.

On the AP Government's request for exemption of capital gains tax on the sale of developed land in the capital region, Jaitley had assured he would "sympathetically consider" and see an early decision was taken in the matter.
Of the 32,221 acres, farmers will get back about
12,000 acres of land in the form of developed plots as per the LPS. The developed land portion amounts to approximately 5,80,80,000 sq yds.
The demonetisation announced by the Centre on November 8 last year dealt a blow to farmers in the region who sold away their land as soon as Amaravati was declared as AP's new capital.

As land in the region saw an abnormal spurt in prices, most of the farmers grabbed the opportunity and made a fast buck as prices ranged from Rs 1 crore to Rs 2.4 crore an acre.
The demonetisation caught the farmers off guard, but they have now received some respite.