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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.


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