Tax on land acquisition

CBDT issues clarification regarding taxability of compensation received by land owners towards land acquired under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation  and  Resettlement  Act, 2013 (‘RFCTLARR’); States that Sec. 10(37) of the IT Act provides for exemption of compensation received on compulsory acquisition of an agricultural land, subject to fulfilment of certain conditions; Also takes note of Sec. 96 of the RFCTLARR Act which provides that compensation received for compulsory acquisition of land under the RFCTLARR Act (except for those made u/s 46 therein) is exempt from the levy of income-tax; Given that no demarcation is made between compensation received for compulsory acquisition of agricultural and non-agricultural land in Sec. 96 of the RFCTLARR Act, CBDT clarifies that the scope of exemption provided in Sec. 96 is wider than tax-exemption provided under IT Act; Thus with a view to address the uncertainty regarding taxability of compensation received on compulsory acquisition of non-agricultural land, CBDT now extends the exemption available in Sec. 96 of the RFCTLARR Act to non-agricultural land “even if there  is no specific provision  of exemption  for such compensation  in the Income-tax  Act, 1961”:

cbdt-circular-36-2016-dt-25-oct-2016-compulsory-acquisition-of-non-agricultural-land-tax-free-under-new-land-acquisition-act

Thanks Sir,

One more query

If it is exempt then why they have deducted TDS

1. Check the acquisition order, under which act the order has been passed.

2. No clear directives to ground level. There are many such exempt incomes, where TDS is still being deducted.