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Compulsory land acquisition

sharfas (article clerk) (55 Points)

18 May 2018

capital gain arising from compulsory land acquisition ( non-agricultural land )is taxable or not,please quote the section also

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (193950 Points)
Replied 18 May 2018

The RFCTLARR Act which came into effect from 1st January, 2014, in section 96, inter alia provides that income-tax shall not be levied on any award or agreement made (except those made under section 46) under the RFCTLARR Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFCTLARR Act), is exempted from the levy of income-tax.

CIRCULAR NO.36/2016 [F.NO.225/88/2016-ITA.II], DATED 25-10-2016

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VARUN MAHESHWARI (79 Points)
Replied 18 May 2018

charging section - 45(5) of IT Act 1961

compulsory acquisition falls within the ambit of tranfser - sec. 2(47)
Thus taxability shall arise under the head Capital gains.
If the land was held for upto 2 years then STCG shall arise.
Taxability shall arise in that F.Y. when the compensation is first received by the assessee.

rama krishnan (12244 Points)
Replied 19 May 2018

I endorse the views of Dhiraj sir.. as per latest cbdt circular, transfers i.e. compulsory acquisition covered under rfctlaar act, will be exempted from tax irrespective of the nature of land i.e. agricultural or non-agricultural