Income-tax under section 96 of the RFCTA

Hi Ramesh,

Your query is about Section 96 of the RFCTLARR Act, 2013 and the tax treatment of compensation received.

Understanding your situation:

• You received Rs. 5,40,000 as compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

• Such compensation is exempt from income tax under Section 96 of the RFCTLARR Act.

• However, TDS @ 10% (Rs. 54,000) was deducted under Section 194LA by the payer.

• You want to know how to file your ITR to claim refund of TDS on exempt income.

Key points:

1. Is the income taxable?
   Compensation under Section 96 of RFCTLARR Act is exempt income.

2. TDS under Section 194LA
   The payer has deducted TDS, but this TDS was wrongly deducted since income is exempt.

3. How to file ITR and claim refund?

   • File ITR-1 or ITR-2 (depending on your other income).

   • In the ITR, show the Rs. 5,40,000 compensation under Exempt Income section.

   • Report TDS amount of Rs. 54,000 in the TDS section of ITR.

   • Since your total taxable income will not include this exempt compensation, your tax liability will be zero.

   • The excess TDS of Rs. 54,000 will be reflected as refundable in your return.

   • Upon processing, Income Tax Department will issue a refund of TDS deducted.

4. Documents to keep ready:

   • Form 16A or TDS certificate showing TDS deducted.

   • Proof of compensation received.

   • Copy of the relevant RFCTLARR Act section or government notification regarding exemption.

Summary steps for you:

If you file your return correctly showing exempt income and TDS deducted, the refund will be processed automatically after assessment.