Bengaluru landowners may face tax hike due to PRR project: Report

The Peripheral Ring Road in Bengaluru, a 73-kilometre expressway aimed at reducing traffic congestion.

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.

The eight-lane road is designed to connect key routes such as Tumakuru Road and Hosur Road. (Representational Image)

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

The state government’s recent order, issued on September 21, confirmed that the BDA will base compensation on the 1894 Act, using the guidance value of the land. While the 2013 Act offers income tax exemptions for acquired land, such provisions don’t apply to the 1894 Act under which the BDA is proceeding, the report added.

This issue was further compounded by a Karnataka High Court ruling on October 29, which stated that tax exemptions cannot 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 like the Karnataka Industrial Areas Development Board (KIADB) and the Karnataka Road Development Corporation, which do not follow the 2013 Act.

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 per cent loss due to Tax Deducted at Source (TDS). The tax implications follow a controversial move by the government to lower the guidance value of properties for the PRR acquisition.

What is the PRR project?

The Peripheral Ring Road (PRR) project in Bengaluru aims to ease 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 Bangalore Development Authority (BDA) has identified 2,596 acres of land for acquisition.