ARREARS INTEREST RECEIVED FROM 2011

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This discussion clarifies the taxability of interest received on delayed compensation for agricultural land acquired in 2011, with payment and interest received in 2021 and 2023 respectively. While the compensation itself for compulsory acquisition of agricultural land is exempt from income tax, the interest accrued on this delayed payment is generally considered taxable. Specifically, 50% of the interest received can be deducted as expenditure under Section 57(4) of the Income Tax Act.

raghavendra b

raghavendra b (Querist)
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20 July 2024 DEAR SIR,

ONE OF MY CLIENT SOLD AGRICULTURAL LAND IN THE YEAR OF 2011 AND THE COMPENSATION PAYMENT RECEIVED IN THE YEAR OF 2021 RS 882000/- AND INTEREST ARREAS RECEIVED IN THE YEAR OF 2023 RS 1566601/-.

THE INTEREST FROM 2011 TO 2023 IS ARREARS TAXABLE OR NOT TAXABLE
TDS NOT DEDUCTED IN THE YEAR OF 2011 AND ALSO 2023

PLEAS CLARIFY ME IF TAXABLE INTEREST OR NOT

REGARDS

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 July 2024 https://itatonline.org/digest/articles/issues-in-taxability-of-enhanced-compensation-interest-thereon-rural-vs-urban-agricultural-land/

raghavendra b

raghavendra b (Querist)
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21 July 2024 THANK YOU SIR,

THIS ARTICLE IS TOO LONG TO DIGEST IN SIMPLE TERM THAT COMPENSATE AMOUNT OF AGRICULTURAL LAND DELAY IN PAYMENT SO THE GOVERNMENT (KIADB STATE GOVERNMENT) ISSUED INTEREST ON SUCH PAYMENT TILL 2023.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 July 2024 The article was posted as you have not specified anything about agricultural land being rural or urban, compensation was enhanced or delayed. Conditions of awarding interest etc.

raghavendra b

raghavendra b (Querist)
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21 July 2024 SORRY SIR,

KIADB (KARNATAKA INDUSTRIAL DEVELOPMENT BOARD) ACQUIRED AGRICULTURAL LAND IN THE YEAR OF 2011 AND COMPESATE RECEIVED IN THE YEAR OF 2021 AND INTEREST RECEIVED ON 2023 DELAY IN PAYMENT.

COMPULSORY ACQUISITION IS EXEMPT FROM INCOME TAX BUT INTEREST ON DELAY IN PAYMENT OF COMPENSATION IS TAXABLE PORTION OR EXEMPTED.

SORRY AGAIN AND THANK YOU SIR

raghavendra b

raghavendra b (Querist)
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21 July 2024 SITUATED IN RURAL AREA NOT MUNICIPAL LIMITS

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 July 2024 Interest on enhanced compensation under section 34 of the Land Acquisition Act is taxable as any other interest. [Section 56(2)(viii)].

Such interest is taxable on receipt basis [Section 145B(1)].

Once such interest is taxable an amount of 50% of such interest is deductible as expenditure [Section 57(4)].

raghavendra b

raghavendra b (Querist)
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21 July 2024 THANK YOU SIR,

THE INTEREST IS 15LAKHS 50% MEANS 7.50 LKHS TAXABLE INCOME

REGARDS

REGARDS

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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21 July 2024 God Bless

raghavendra b

raghavendra b (Querist)
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21 July 2024 SORRY SIR

REGARDS

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