TDS on payment of compensation on acquisition of certain immovable property [Section 194LA] | AY 2019-20 onwards

Last udpated: Jan. 15, 2019, 12:49 p.m.


Section 194LA provides for deduction of tax at source by a person responsible for paying to a resident any sum 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).

Immovable property means any land (other than agricultural land) or any building or partof a building.

Rate of TDS

The amount of tax to be deducted is 10% of such sum mentioned in (1) above.

Time of deduction

The tax should be deducted 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.

Threshold limit

No tax is required to be deducted 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  Rs 2,50,000 .

Non-applicability of TDS under section 194LA

No tax is required to be deducted where payment is made in respect of any award or agreement which has been exempted from levy of income tax under section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

Posted by CA Ankit Sharma under Income-Tax

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