Landowners in Bengaluru could face tax hikes due to PRR project: Report

In a possible setback for landowners in Bengaluru, hundreds of farmers whose properties are acquired for the city’s Peripheral Ring Road (PRR) could face tax liabilities on the compensation they receive. Deccan Herald reported.

The eight-lane highway is designed to connect major routes such as Tumakuru Road and Hosur Road. (Representative image)

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

The state government’s recent order, issued on September 21, confirmed that the BDA will base the compensation on the 1894 Act using the guideline 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 operates, the report said.

This issue was further compounded by a Karnataka High Court ruling on October 29, which stated that tax exemptions cannot be applied to land acquisition under any law except the 2013 Act.

The court’s decision could impact not only farmers involved in the PRR project but also those whose land has been acquired by other government agencies such as the Karnataka Industrial Areas Development Board (KIADB) and the Karnataka Road Development Corporation, that do not follow the 2013 law.

Concerns among farmers

This ruling has raised concerns among farmers as it not only deprives them of fair compensation under the 2013 law, but also exposes them to income tax liabilities, including a potential loss of 12.5 percent due to tax deductions at source (TDS). The tax implications follow a controversial move by the government to reduce the guideline value of properties for PRR purchase.

What is the PRR project?

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