Karnataka High Court rules tax deduction not applicable on enhanced land acquisition compensation and interest

The Karnataka High Court issued a directive mandating the payment of enhanced land acquisition compensation without any deduction of tax at source. The court based its ruling on the principle that interest granted under Section 28 forms an intrinsic part of the compensation itself rather than independent income subject to withholding tax.

This ruling resolves ambiguity regarding tax deduction obligations on statutory interest payments arising from compulsory property acquisitions. It ensures that landowners receive their full compensation amounts without premature tax deductions by acquiring authorities.

Landowners awaiting disbursements of enhanced compensation should present this high court ruling to disbursing authorities to prevent improper tax deductions. Legal professionals must ensure compliance with this precedent when handling land acquisition settlements within the jurisdiction.