RECEIVED BENEFITS UNDER REHABILITATION AND RESETTLEMENT ACT 2013

Hi Ramesh Kumar,

Regarding the compensation received under the Rehabilitation and Resettlement Act, 2013:

Is this compensation income taxable or exempt?

• Compensation received for displacement or acquisition of land/building under the Rehabilitation and Resettlement Act is generally considered exempt under Section 10(37) of the Income Tax Act if it relates to compulsory acquisition of agricultural land.

• However, if the compensation is for non-agricultural land or other assets, the exemption may not fully apply.

• Since you mention the compensation is for houses or displacement, and there is a specific scheme for affected families to get houses or financial grant, such compensation/benefits are generally treated as exempt under the Income Tax Act if they are compensation for loss due to acquisition and resettlement.

What about the TDS deducted?

• Even if TDS has been deducted by the payer, you may claim exemption while filing your income tax return by providing the details of compensation and nature of income.

• You can claim refund of excess TDS deducted if the income is fully exempt.

Summary:

• Compensation received under Rehabilitation and Resettlement for displacement is usually exempt under Income Tax Act.

• TDS deducted can be claimed as refund or adjusted against other tax liability.

• Keep all documents and official communication handy to substantiate the exemption.