Can we deduct the tds on compansation? if yes which rate?

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Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2011 We have a One Power Project. In that For Power Distribution 66 KV Line is required. So that we have done it. For Tower Of 66 KV Line we have paid compensation to Farmer in which farm we have put the Tower.

Can we deduct any TDS on this compensation? If Yes under which section TDS Applicable?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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27 September 2011 Have you paid compensation or rent? Is it a one time payment or to be made at regular intervals?

Querist : Anonymous

Querist : Anonymous (Querist)

27 September 2011 This is one time payment as a compensation

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Pragnesh

Pragnesh (Expert)
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27 September 2011 After making section 194L non operational w.e.f. 01.06.2000 vide the Finance Act, 2000 new section 194LA was inserted w.e.f. 01.10.2004 vide the Finance (No.2) Act, 2004. New section is restricted to compensation etc. payable in respect of immovable property, other than agricultural land. There is no doubt or ambiguity that in case the property is any agricultural land then TDS is not required. This is clear in the language of section wherein in bracket 'other than agricultural land' is mentioned, this is also mentioned vide Explanation (ii) to the section. Any agricultural land is excluded, it is not a case that the agricultural land should not be a 'capital asset'. Whether agricultural land is capital asset or not will make no difference.
Hence if it agricultural land then no TDS will be applicable.

For further reference pls. Analysis of High Court's observation as to facts of the case and arguments of parties:
(Risal Singh & Anr. v. UOI & Ors. [2010 -TMI - 75720 - PUNJAB AND HARYANA HIGH COURT])

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