Relief for acquired land exempt if it is within MC limits

SC Vasudeva

Q. I am a farmer and the government has acquired my land for the construction of road. Is the compensation received by me from the government taxable?

— Ambalal Prajapati

A. You have stated in your query that you are a farmer. It is presumed that the land was used by you for agricultural purposes during the period of two years immediately preceding the date of acquisition and compensation for such acquisition is approved by the Central government. Further, that the land was situated within the municipal limits or any other local authority of similar nature or within 8 km measured aerially from the municipal limits or any other local authority of similar nature. In such case, the compensation received will be exempt from income-tax. The amount of compensation would also not been taxable in case the land is situated beyond the limits referred to hereinabove. In case you do not fulfil the above conditions, the amount of compensation would be taken into consideration for computing the amount of capital gain which would be taxable under the provisions of the Income-tax Act, 1961 (The Act.). It would be treated as a long-term capital gain if the land was held for a period of more than two years and income-tax would be leviable @20% plus education cess of 3% thereon.  The amount of capital gain would be treated as a short-term capital gain if the land was held for less than two years and the amount of capital gain would be taxable at the normal slab applicable to an individual assessee.  It may be added that the period of two years for computing the amount of long-term capital gain has been brought into force from assessment year 2017-18. Therefore, in case the acquisition has taken place in financial year 2016-17 or in a later year, period of two years shall be taken into consideration for computing the amount of long-term capital gain.

Q. I am a government employee and retiring on 28.02.2018 after attaining the age of 60 years. Am I eligible for rebate of senior citizen under the act during the financial year 2017-18? Please advise.

— Gursevak Singh Sidhu 

A.  You will be entitled to the benefits available to a senior citizen under the provisions of the Income-tax Act, 1961 (The Act) as you will attain the age of 60 years on March 31, 2018.

Q. The donation receipts from AIIMS mention that the amount of donation is eligible for deduction under Section 80G of the Income Tax Act, 1961 vide notification no. CCIT(E)/Order u/s 80G(2)(a)(iif)/2015-16/1569 dated October 7, 2015. However, it does not state as to whether the rebate is 100% or 50%. Please advise.

— ND Jain

A. Section 80G (2)(a) of the Income Tax Act, 1961 (The Act) does not contain a clause (iif).  Presumably, sub-clause referred to by you could be 80G(2)(a)(iiif) of the Act. In case this presumption is correct, you should be entitled to claim deduction to the extent of 100% of the amount paid as donation to the AIIMS.