Section - 194LA - Non-deduction of tax in
case of exempt compensation under Right to Fair Compensation and Transparency
in Land Acquisition Rehabilitation and Resettlement Act, 2013
The existing provision provides
for TDS at the rate of 10% on the amount of compensation or enhanced
compensation on account of compulsory acquisition of any immovable property
under any law.
Consequent to the new central law
viz. Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act 2013 (RFCTLARR Act), income tax is not be
levied on award or agreement subject to the limitations under that Act. Since
compensation is not taxable, the question of TDS does not arise. This position
was stated by the CBDT in circular no.36/2016 dated 25.10.2016. However, the
provision remained in the statute. The amendment now seeks to provide that no deduction shall be made under this
section if the compensation is paid under this Act and same is tax exempt under
section 96 of that Act.