Income tax on compensation on land acquisition

Dear Anup Kumar,

Rural Agricultural land is not a capital asset as per Section 2(14)(iii) of Income tax act, 1961.

So this compulsory acquision is not taxable. The enhanced compensation is also not taxable. however the interest on enhanced compensation received if any, then that will be offerred as income from other sources.

As the Govt has deducted TDS @ 10%, it seems that your father has his PAN. So, First ensure that your father's income (other than agricultural income but including interest income) doesnot exceed the maximum amount which is not chargeable to tax (Rs. 3.2 lakhs in case of your father is a senior citizen),.

If yes, well you can file ITR-1 (In case of agricultural income doesnot exceed Rs.5000/-) or ITR-2 in case of agricultural income exceeds Rs5000/- for AY 2015-16 and claim the refund of entire tds.

Before filing the return of income, check with Form 26AS whether the tds has been credited in that FY or not. You can well get the refund amount

Thanks

CA Gokul Raj

yes he has PAN and the compensation that he got is not interest and also amt is showing in 26AS.So how can i file ITR2. Means how i show that income and claim refund.

Show the enhanced compensation amount in exempted income column. and show the agricultural income in agricultural income column. taxable income shall be NIL. and fill the TDS amount and TAN carefully as per the 26AS. Mention your father's savings Bank account towhich the refund has to be credited. File the form electronically. 

Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 provides for exemption form income tax for all compensation agaisnt compulsory acquisition of land whether rural or urban and whther agricutural or non-agricultural to all asasseess irrespective of status whereas s. 10(37) of Income Tax Act, 1961 provided for exemption to Individuals and HUFs only for agricultural land. This provision is a pecial provision.