In a potential setback for Bengaluru landowners, hundreds of farmers whose properties are being acquired for the city’s peripheral ring road (PRR) may face tax liabilities on the compensation they receive. Deccan Herald reported.

According to the DH report, the Bengaluru Development Authority (BDA) is acquiring approximately 2,560 acres of land under the Land Acquisition Act, 1894, which does not include the tax exemptions provided under the Right to Fair Compensation and Transparency Act, 2013 (RFCTLARR).

The state government’s recent order, issued on September 21, confirmed that the BDA will base compensation on the 1894 Act, using the indicative value of the land. While the 2013 Act provides income tax exemptions for acquired land, such provisions do not apply to the 1894 Act under which the BDA proceeds, the report added.

This issue was further aggravated by a ruling by the Karnataka High Court on October 29, which stated that no tax exemptions can be applied to land acquisitions under any law except the 2013 Act.

The court’s decision could affect not only farmers involved in the PRR project but also those whose lands are acquired by other state agencies such as the Karnataka Industrial Areas Development Board (KIADB) and the Karnataka Road Development Corporation. , which do not follow the 2013 Law.

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Concern among farmers

This ruling has caused concern among farmers as it not only deprives them of fair compensation based on the 2013 Act, but also exposes them to income tax liabilities, including a potential 12.5 percent loss due to Tax Deducted at Source (TDS). The tax implications follow a controversial move by the government to reduce the indicative value of properties for PRR acquisition.

What is the PRR project?

The Peripheral Ring Road (PRR) project in Bengaluru aims to alleviate traffic congestion by constructing a 73-kilometre, 100-metre wide access-controlled expressway. This eight-lane road is designed to connect key routes such as Tumakuru Road and Hosur Road, with important intersections along Hesaraghatta Road, Doddaballapura Road, Old Ballari Road, Hennur Road, Old Madras Road, Hoskote Road and Sarjapur. As part of the development, the Bengaluru Development Authority (BDA) has identified 2,596 acres of land for acquisition.

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