NEW DELHI: People receiving compensation for land acquisition for national highway projects have been exempted from income tax and stamp duty, a move that will bring relief to a large number of landowners and farmers. The Union Road Transport Ministry said that such compensation shall not be deducted from tax at source (TDS) and asked all NH-affiliated agencies to adhere to this norm. In the financial year 2025-26, various agencies paid around Rs 20,000 crore to acquire more than 10,000 hectares of land for highway development. In a notification to NH agencies, including NHAI, the road transport ministry said the compensation paid in acquisition of land under the NH Act, if determined as per the provisions of the Land Acquisition Act, 2013, will be “exempt” from income tax under the Act. The letter referred to the notification issued by the Central Board of Direct Taxes (CBDT) on October 25, 2016 and Section 402 of the Income Tax Act, 2025, which clearly states that compensation received on awards exempted under the Land Acquisition Act, 2013 shall not be taxable even in the absence of specific provisions.
