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Section 194LA of the Income Tax Act 1961 is a provision that deals with the deduction of Tax Deducted at Source (TDS) on payments made as compensation for compulsory acquisition of certain immovable property. Compulsory Land Acquisition Meaning Compulsory land acquisition refers to the pr
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Section 194LA of the Income Tax Act mandates Tax Deducted at Source (TDS) on compensation paid for the compulsory acquisition of land (excluding agricultural), buildings, or other immovable property.
From April 1, 2025, the threshold limit for TDS deduction under Section 194LA increases from ₹2,50,000 to ₹5,00,000 in a financial year.
The TDS rate is 10% of the amount payable. This rate can increase to 20% if the payee does not provide their PAN.
TDS is not applicable if the total compensation in a financial year is ₹5,00,000 or less. It is also exempt for agricultural land in rural areas and certain acquisitions under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.
The deductor must file TDS returns in Form 26Q and issue Form 16A to the payee as proof of TDS deduction.
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