COMPULSORY AQUISITION ON RURAL LAND TAXABLE OR NOT

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This discussion clarifies whether compensation received for compulsory land acquisition is taxable. It confirms that such compensation is generally exempt from income tax under Section 10(37) of the Income Tax Act, regardless of whether the land is rural or urban. The advice given is to show the amount under the fully exempted income schedule in the Income Tax Return (ITR), and that TDS is typically not deducted in these cases, thus avoiding queries.

raghavendra b

raghavendra b (Querist)
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25 May 2024 DEAR SIR,

ONE OF MY CLIENT'S INHERITED LAND (SITE) SIZE 34 METER ACQUIRED BY STATE HIGH WAY AND COMPENSATION AMOUNT PAID TO MY CLIENT. THE COMPENSATION AMOUNT RECEIVED BY CLIENT IS TAXABLE INCOME OR EXEMPTED U/S 10(37).
IT IS COMPULSORY SHOW IN ITR OR NOT?
BECAUSE THE PROPERTY INHERITED DETAILS NOT CLEARLY PROVIDED. OR
JUST ENTER THE AMOUNT RECEIVED IN EXEMPTION SECTION 10(37).

PLEASE CLARIFY ME
THANK YOU

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 May 2024 Show it under exempt income schedule of ITR.

raghavendra b

raghavendra b (Querist)
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25 May 2024 THANK YOU SIR FOR YOUR REPLY,

UNDER LIST OF FULLY EXEMPTED COLUMN TO SHOW THE AMOUNT U/S 10(37).
IS THERE ANY QUERY WILL RISE BECAUSE THEY DID NOT DEDUCT TDS ON IT.
ANY PROPERTY SITUATED IN RURAL AREA IS EXEMPTED FROM CAPITAL GAIN.

REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 May 2024 TDS not deducted hence it's exempt income no queries will be raised.
Show it fully under exempt income schedule.

raghavendra b

raghavendra b (Querist)
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25 May 2024 THANK YOU FOR YOUR REPLIES SIR,

REGARDS

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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25 May 2024 You are welcome..
..

PARAS CHHAJED

PARAS CHHAJED

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31 May 2024 Any compensation received against compulsory acquisition of any land be it rural or urban, agricultural or non-agricultural is exempt from income tax as per the provision of Right to Fair Compensation and Transparency in land Acquisition Rehabilitation and Resettlement Act 2013. Please also refer Circular No. 36 dated 25.10.2016 issued by CBDT. TDS is not required in cse of compulsory acquisition by government. There is no specific column in any ITR for disclosure of such compensation.

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