Home > Income Tax > TDS/TCS > TDS from compensation payable on compulsory acquisition of immovable property – Sec 194LA

TDS from compensation payable on compulsory acquisition of immovable property – Sec 194LA

U.C Date : 25 Feb 2015

Any person responsible for paying to a resident any compensation on account of compulsory acquisition of any immovable property (other than agricultural land) is responsible for deducting tax at source.

Tax is to be deducted at the time of payment of aforesaid sum in cash or by cheque or draft whichever is earlier. Tax is not liable to be deducted at the time of crediting the account of payer i.e tax is deducted on cash basis only.

Tax is to be deducted at the rate of 10%. If the recipient of income doesn’t furnish his PAN to deductor then TDS is to be deducted @ 20%.
However tax is not deductible if the aggregate amount during a financial year does not exceed Rs. 2,00,000 (Rs. 2,50,000 from financial year 2016-17)
Assessee can apply to assessing officer for no TDS or TDS at lower rate under Section 197.

Bare Act for Sec 194LA

Bare Act for Sec 194LA

Any person responsible for paying to a resident any sum, being in the nature of compensation or the enhanced compensation or the consideration or the enhanced consideration on account of compulsory acquisition, under any law for the time being in force, of any immovable property (other than agricultural land), shall, at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon.

Provided that no deduction shall be made under this section where the amount of such payment or, as the case may be, the aggregate amount of such payments to a resident during the financial year does not exceed [two] hundred thousand rupees.

Explanation.—For the purposes of this section,—

(i) “agricultural land” means agricultural land in India including land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;

(ii) “immovable property” means any land (other than agricultural land) or any building or part of a building.

Get updates and weekly newsletter in your email. Join more than 10,000 subscribers !