Your Taxes

My agriculture land was acquired by NHAI (National Highways Authority of India) for the National Highways Development Project. Please guide me whether the capital gains from this compulsory acquisition is tax-free.

My accountant said there is no capital gains tax on compulsory acquisition of agriculture land.

Vijay Kumar Jain

Capital gains arising on the sale, exchange or relinquishment of a capital asset or the compulsory acquisition of a capital asset under any law is taxable under the Income Tax Act.

However, an agricultural land in rural area in India (i.e., which is not situated in a specified urban area/jurisdiction of municipality/cantonment board, etc) is not regarded a capital asset.

Accordingly, capital gains arising on the compulsory acquisition of rural agricultural land is exempt from tax.

Further, capital gain arising on compulsory acquisition of agricultural land situated in a specified urban limit is exempt from tax under Section 10(37) of the Income Tax Act, subject to fulfilment of prescribed conditions therein.

One such condition is that such land should have been used for agricultural purposes for at-least two years immediately preceding the date of acquisition.

Further, the land should be situated in any area within the jurisdiction of a municipality/cantonment board having a population of at least 10,000 or any such area being within 8 km measured aerially from the local limits of the nearest municipality/cantonment board having a population of more than 10 lakh.

Please advise whether gifted shares attract capital gains tax.

NV Srinivas

As per Section 47 of the Income Tax Act, 1961, any transfer of a capital asset under a gift is not regarded as ‘transfer’ giving rise to capital gains taxable under Section 45 of the Income Tax Act.

Accordingly, gift of shares does not attract capital gains tax for the donor.

I recently started playing online cricket in Dream11 (a fantasy sports platform). I won ₹65,000 . But my profit is only ₹15,000.

All winnings are less than ₹10,000 and no TDS (tax deducted at source) has been deducted.

I would like to know whether I am required to pay income tax on ₹65,000 or ₹15,000, my profit from the game.

Geetha V Pai

The Income Tax Act does not allow any expenditure in relation to income earned from winnings from lottery, games, etc, or any deduction under chapter VI A - 80C/80D/80G, etc, against such income.

Accordingly, the entire amount of ₹65,000 received as winnings from playing games in Dream11 is taxable at a flat rate of 30 per cent (plus, applicable surcharge and cess).

The writer is Partner, Deloitte India. Send your queries to taxtalk@thehindu.co.in

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