The Bombay High Court ruled that compensation under the National Highways Act is exempt from TDS as per the Land Acquisition Act. This decision quashed earlier orders imposing TDS deductions.
TDS not deductible on National Highway Land Acquisition Compensation
The Bombay High Court recently held that compensation awarded under Section 3G(5) of the National Highways Act is not subject to Tax Deducted at Source (TDS), citing exemption provisions under Section 96 of the 2013 Land Acquisition Act. This ruling was crucial in addressing previous orders that mandated a 10% TDS deduction on such compensation.
The Court underscored that the provisions under the Land Acquisition Act clearly delineate these awards as absolved from income tax obligations, thus rendering any TDS deduction invalid. The decision emphasized the intent of legislation aimed at providing fair compensation to landowners.
“Compensation awarded under the National Highways Act does not fall within the purview of income subject to taxation,” the Court remarked.
This ruling carries important implications for legal practitioners involved in land acquisition and compensation matters. It highlights the necessity for legal clarity regarding TDS obligations and affirms that statutory exemptions must be observed when determining tax liabilities associated with such compensatory awards.
Citations
- Bombay HC (2026) Order
