CA. Brijesh Baranwal
Quick Summary
The development works in the country are going on all over the country including widening of the existing as well as construction of new roads. For this purpose, land acquisition is the most important part of the process. The farmers and rural people who perhaps own substantial part of the rural lan
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FAQ :
Generally, compensation received for the compulsory acquisition of agricultural land is not taxable. This is because agricultural land, if not located in specified urban areas, is not treated as a capital asset under the Income Tax Act. Additionally, Section 96 of the RFCTLARR Act exempts such compensation from income tax.
A capital asset is defined under Section 2(14)(iii) of the Income Tax Act. It generally includes agricultural land, but excludes land situated in specific urban areas based on population and distance from municipalities or cantonment boards.
Yes, Section 96 of the RFCTLARR Act states that income tax shall not be levied on any award or agreement made under this Act, except for those made under Section 46.
Yes, for agricultural land situated in specified urban limits, Section 10(37) of the Finance (No. 2) Act, 2004, provides specific exemption for capital gains arising from compulsory acquisition, subject to certain conditions being met.
The RFCTLARR Act provides exemption for compensation received for compulsory acquisition of both agricultural and non-agricultural land, making its scope wider than the specific exemptions under the Income Tax Act.
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