Tax on settlement made by Govt for land acquisition

Hi , 

One of my Family Property was taken by TN Govt under Land Acquisition Act  40 years back. Finally via Private Negotiation Govt has agreed to do the Settlement for the Land which was Acquired year back.  I have been told by PWD, when the Govt gives us fund they will capture 10.3 %  for tax purpose. So please help me with my questions

1. In what ways we can get Tax Exemption for the money which we will be receiving from the Govt. In Short Term and Long Term Perspective. 

2. What all Tax Liabilities will be involved for the received money

3. How to avoid or get the refund for 10.3% which will be deducted by the Govt before issuing the fund to us

4. Since the settlement took 40 years, can we avail any Tax Benefits
Asked 9 months ago in Capital Gains Tax from Chennai, Tamil Nadu
First you need to specify whether Land was Agriculture or not.

If Land is Agriculture the you can take advantage of Section 47(VIII) which says any transfer of Agriculture Land before March 1, 1970 is not treated as Transfer under Income Tax. Since in your case transfer was effected before 40 years thus you can take benefit of this section if such land was Agriculture Land.

Section 194LA says 10% deduction in case of compulsory acquisition. However if Land is Agriculture or the compensation is less then 2,00,000/- then 194LA not required.
Saket Jain
CA, Greater Mumbai
23 Answers
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1. Exemption is given in case of agricultural land. Agriculture Land transferred before March 1, 1970 is not treated as Transfer under Income Tax. 
if you do not satisfy the above-mentioned conditions you have to pay capital gain tax. However there are ways to save this tax.

2.Appropriate capital gain tax needs to be paid (if applicable) and return of income needs to be submitted .

3. You can't avoid deduction of TDS. However you can apply for refund at the time of submitting return of income, if eligible.

4. There are various ways to get exemption from capital gain taxes
Abhishek Dugar
CA, Mumbai
761 Answers
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at the time of filing you can claim the amount. It will be long term capital gains. The TDS will be adjusted against your tax liability if any and the remaining amount you can claim refund.

Shyam Sunder Modani
CA, Hyderabad
955 Answers
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Dear Sir,

You can adjust the amount deducted by the authorities to the amount of Tax Payable on Capital Gain if any.

Any excess amount deducted shall be refunded back to you.

Trust this clarifies your query.

Feel Free to get back for further clarifications.

Thanking You.

Regards,
CA Rohit R Sharma
BCOM, CA, LLB - GEN, CERT. FAFP.
Rohit R Sharma
CA, Mumbai
719 Answers
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You may have to pay additional tax depending on how much capital gain tax works out.

We shall be glad to assist you in computing your tax liability
Abhishek Dugar
CA, Mumbai
761 Answers
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Yes you need to pay taxes after calculations. You can invest the same in capital gains account scheme and then can utilise that for purchase of residential property to get exemption
Shyam Sunder Modani
CA, Hyderabad
955 Answers
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Yes. Its a long term capital gain and tax rate is 20% after taking indexation benefit.
Saket Jain
CA, Greater Mumbai
23 Answers
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You have to pay Capital Gain Tax. Its a long term capital gain. However there are ways to save this Tax. At the the time filing ITR you can adjust TDS amount. Any excess amount deducted shall be refunded.
Shiv Kumar Agarwal
CA, Delhi
195 Answers
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Dear Sir,

That depends on the amount of Capital gain you have made and the amount of Tax that is deducted. 
Rohit R Sharma
CA, Mumbai
719 Answers
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