Is compensation received for land acquired by govt. taxable?

TDS deducted by your client is different from your tax liability.

Q. Our land was acquired by a central government agency in the year 1962 (actually 1954). The agency paid a small amount after so many years of legal battle. After accepting the amount amid protest, we filed a case again and a lower court gave its verdict. After that, the government agency went to the high court questioning the verdict and the court asked the government to deposit 50% of the amount in the court. Meanwhile, on account of COVID-19, the hearing is in a standstill. My question is whether the amount received as compensation is taxable? For, we have not sold the land. The amount received includes the market price, penalty for not paying in time, and solatium.

Roy George

A. Compulsory acquisition of land by a government agency is construed as a transfer under Income Tax Act, and requisite Capital Gains Tax is attracted, which is to be computed as per the provisions laid. As the acquisition of your lands were done in 1954, The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013’, shortly known as RFCTLARR Act, which came into effect from January 1, 2014, will not apply in your case. Section 96 of the RFCTLARR Act states that ‘No Income Tax’ or ‘Stamp Duty’ shall be levied on any award or agreement made under RFCTLARR Act when lands are being acquired by appropriate government (including government companies and trusts/AOPs/societies controlled by government), except under Section 46, wherein Section 46 deals with land purchase by non-government/private parties through RFCTLARR Act. Enhanced compensation as awarded by courts is taxable under the head ‘Capital Gains’. Interest on compensation as awarded by the courts will be taxable in your hands in the year of receipt of such enhanced compensation under the head ‘Income from Other Sources’.

Q. I am a senior citizen aged 83 years and a state government pensioner. I have been contributing a sum of ₹12,500 every month through my bank account towards my paternal grand daughter’s Sukanya Samriddhi Yojana Scheme (SSA) account since my son is unable to contribute the said sum. I have been contributing to this scheme for the past two years. Please enlighten me whether I am eligible for the tax deduction of ₹1,50,000 that is one year contribution, under Section 80C of the Income Tax Act.

K. Ramamoorthy

A. Under Section 80C of the Income Tax Act, deduction towards contribution to Sukanya Samriddhi Yojana (SSY) can be claimed only by parents of the girl child or her legal guardian. You cannot avail the deduction if you are not the legal guardian.

Q. I am currently working as an online tutor, the company has provided Form 16A for Q2 (2020) for TDS. I don’t know when they will provide for Q3. What I want to know is that will I be able to file ITR for Q3 without paying fine as and when they provide me the form 16A? And my annual income is also non-taxable.

Deepak Chhetri

A. TDS deducted by your client is different from your tax liability. TDS is a mechanism wherein certain portion of your payments are withheld and remitted to the government subject to rules regarding applicability, rate of deduction, time of deduction, issuance of deduction certificates among others. You may check your Form 26AS if you have not received the relevant Form 16A from your client and follow up with them accordingly. You may calculate your tax liability in accordance with the provisions of the Income Tax Act and claim the refund of the TDS if your income is below basic exemption limit or within the rebate limits. There will be no incidence of late fee if the ITR is filed by you within the due date.

Q. I received an intimation u/s 143(1) saying I have an I-T refund of ₹20,640 for AY 2020-21.Even after six weeks of getting the message I have not received the refund. On tracking the refund I get the message ‘No records. Your assessing officer has not sent this refund to the refund banker. Please contact your Assessing Officer.’ How do I proceed from here to get the refund without any further delay?

Rathi Menon

A. You may post a grievance regarding this matter by logging onto your I-T e-filing profile and by clicking ‘e-Nivaran’. Under e-Nivaran, click ‘Submit Grievance’ and fill in the details by addressing the grievance to ‘Assessing Officer (ITO/ACIT) or Supervisory Hierarchy’. Under that, choose ‘Refund not received’. It will automatically select your assessing officer on populating the above details. Further, select the relevant assessment year, attach relevant documents and describe the issue in sufficient length. On submission of the form, you will receive an acknowledgement number which is to be used to track your grievance. You can also track the status of your grievance by logging onto your I-T e-filing profile any time. You will be receiving the appropriate response to your registered e-mail address.

Q. I want to know whether the annual insurance premium of ₹12 and ₹330 which we pay for the benefit for the death claim by accident (under the central govt. scheme ) is eligible for I-T benefit under Sec. 80 C or under any other section? In personal income tax, whether the old regime is valid for financial year ending March 31, 2022?

Ravindra Kumar

A. Under Section 80C(2) of the I-T Act, any insurance premium paid to keep a life insurance policy in force from an insurer approved by IRDAI.

Subject to premium payment being 10% of the sum assured for policies taken post April 1, 2012 and 20% for those policies taken prior to March 31, 2012. Kindly check if the aforementioned conditions apply to your policy and accordingly claim the deduction. You may choose to opt for new or old tax slab regime, whichever is beneficial to you, for FY20-21, and so forth until notified otherwise by the government. Further, you carry out this exercise every year. However, if you are having any business income and you choose new tax regime in any year, you cannot fall back to old regime in the forthcoming years.

Q. I am a senior citizen aged 80 years and covered up to ₹90,000 by insurance under OPD treatment. Can I claim expenses exceeding ₹90,000, up to ₹50,000, under Section 80D of I-T Act during AY2020/21? Please advise.

R.S. Agrawal

A. Under Section 80D of the I-T Act, if no amount is being paid to keep in force a medical insurance with respect to a senior citizen, then medical expenditure incurred is eligible for deduction for an amount up to ₹50,000 for such senior citizen. In your case, as you are already covered by a medical insurance policy, you cannot further claim medical expenses incurred under Section 80D.

(N. Sree Kanth is Partner, GSS Associates, Charted Accountants, Chennai)

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