People get tax relief for land acquisition

Landowners will not have to pay additional taxes other than the source tax on compensation earnings from immovable property – mainly land – acquisition by the government. The National Board of Revenue (NBR) issued a statutory regulatory order (SRO) in this regard on Wednesday.

The NBR will consider the existing source tax at 3 per cent and 6 per cent on compensation gained from the acquisition as final taxes for 2023-24 tax year. The source tax is different depending on the area.

Previously, affected landowners were required to pay an additional tax of 12 per cent and 9 per cent respectively as the tax on compensation amounts (capital gains) was 15 per cent.

The land is acquired mainly by the government and other public agencies for different development projects.

The source tax, also known as the AIT, is 6 per cent in municipal corporations, pourashavas, and cantonment boards, and 3 per cent in other jurisdictions on income earned as compensation for acquiring immovable properties.

According to the 1894 Land Acquisition Act, governments can purchase private land for public interest. Nevertheless, the legislation does not give owners enough room to contest these purchases.

The government had tripled the AIT on compensation amounts for properties located in any city corporation, municipality, or cantonment board region from 2 per cent to 6 per cent in the national budget for FY2020-21.

The rate increased from 1 per cent to 3 per cent in other places.