HC ruling on taxing compensation could have national impact

A significant case pending before the Karnataka High Court could lead to a landmark ruling on the taxation of compensation for land acquired for national highway projects, potentially affecting landowners across India.

- BANSY KALAPPA @Bengaluru

The case, currently being heard by Justice MI Arun, challenges the practice of levying income-tax on compensation received by landowners under the National Highways Act, 1956.

The petitioner, Supriya Shetty, a businesswoman from Mangaluru, argues that tax deductions violate Section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement Act, 2013—RFCTLARR Act.

This provision exempts compensation from tax in certain land acquisition cases.

The outcome of this case could have far-reaching consequences, as it represents the first judicial review of whether tax exemption applies to land acquisition under the National Highways Act.

Advocate Dheeraj SJ emphasized the significance of the case, noting that if the court rules in favour of the petitioner, it would set a precedent with nationwide implications.