73-Km PRR Project In Bengaluru: Farmers Could Be Taxed On Land Compensation

Landowners in Bengaluru may face a challenge, as several farmers impacted by the 73-kilometre Bengaluru Peripheral Ring Road (PRR) project could be subject to tax liabilities on the compensation they receive, according to a report by Deccan Herald.

The Bangalore Development Authority (BDA) is set to acquire approximately 2,560 acres of land under the 1894 Land Acquisition Act, which does not permit the tax exemptions available under the 2013 Right to Fair Compensation and Transparency Act (RFCTLARR), according to the report.

A state government order issued on September 21 confirmed that the BDA will determine compensation based on the 1894 Act, referencing the land's guidance value. While the 2013 Act allows for tax exemptions on acquired land, these provisions do not extend to acquisitions made under the 1894 Act, which the BDA is following.

A further complication arose from a Karnataka High Court ruling on October 29, which clarified that tax exemptions are inapplicable to land acquisitions executed under any legislation other than the 2013 Act.

This ruling could have implications not just for farmers involved in the PRR project, but also for those whose land is acquired by other state bodies, like the Karnataka Industrial Areas Development Board (KIADB) and the Karnataka Road Development Corporation, both of which do not operate under the 2013 Act.

Farmers are increasingly concerned as this situation not only denies them the fair compensation benefits afforded by the 2013 Act but also subjects them to income tax liabilities, potentially resulting in a 12.5% deduction due to Tax Deducted at Source (TDS). These tax implications are compounded by a contentious government decision to lower the guidance value of properties earmarked for PRR acquisition.

What is the PRR project?

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