I am to receive compensation for compulsory acquisition of immovable property in the year 1999-2000 acquired under the old land acquisition act. At the time of acquisition, I was not paid compensation for the same and finally was awarded by the Court in the year 2017, and the amount is being paid now. As the old act is repealed now and as per the new law the amount paid under compulsory acquisition is totally exempt, what would be applicable in this case.
Hello Mr. Shrinivas,
As per the Income Tax Act'1961 the compensation received for compulsory acquisition of immovable property is to be treated as Deemed transfer of Capital Asset, hence chargeable to income tax under the head "Capital Gain".
As per Sec.45(5) of the Act, such compensation will be taxable in the previous year in which it is first received. For the purpose of calculation of capital gain tax, the Full Value of Consideration would be the compensation awarded.
Accordingly, in your case you are liable to pay the capital gain tax and file the ITR for the previous year 2017-18.
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