31 July 2012
dear sir my client has received enhanced compensation on the acquisition of agriculture land situated within the municipal limits. TDS @ 10% has been deducted from the compensation amount. now i want to know that whether the compensation amount received is tax free or not and how we can claim refund of the TDS.
31 July 2012
Enhanced compensation is taxable in the year of receipt.
Computation of capital gain arising from Enhance compensation
Enhance compensation ------- Less Litigation Exp Actual Less Indexed Cost of Acquisition N.A. Less Indexed cost of Improvement N.A.
LTCG/STCG Taxable
In short no Indexed Cost of Acquisition and ndexed cost of Improvement is allow to deduct from enhance compensation. However Litigation and necessary exp (Advocate Fee, Court Exp etc) are allow to deduct on actual basis.
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