Peripheral Ring Road: Bengaluru Landowners Face Potential Tax Burden On Compensation Received

In a potential setback for landowners around Bengaluru, hundreds of farmers whose lands are being acquired for the city’s Peripheral Ring Road (PRR) project also known as Business Corridor Project could face tax liabilities on the compensation received.

The project is designed to encircle the city's peripheries, aims to alleviate traffic congestion and improve connectivity in the region. It will traverse through 10 major junctions and over 100 minor intersections, strategically placing 16 flyovers at key locations such as Hesarghatta Road, Old Madras Road, Whitefield Road, Channasandra Road, and Hosur Road, among others.

According to a report by Deccan Herald, the Bangalore Development Authority (BDA) is acquiring roughly 2,560 acres of land under the Land Acquisition Act of 1894. This older legislation lacks the tax exemptions provided under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation, and Resettlement (RFCTLARR) Act of 2013.

A state government order issued on September 21 confirmed that the BDA would calculate compensation for these lands based on the guidance value and provisions of the 1894 Act.

While the RFCTLARR Act offers tax relief for acquired lands, these benefits do not extend to acquisitions under the 1894 Act, which the BDA is currently using.

The issue was further complicated by a Karnataka High Court ruling on October 29. The court clarified that tax exemptions on land acquisitions apply only to cases handled under the 2013 Act, impacting not only PRR farmers but potentially those involved in projects by the Karnataka Industrial Areas Development Board (KIADB) and the Karnataka Road Development Corporation. Both agencies also use laws other than the RFCTLARR Act for land acquisitions.

This ruling has raised concerns among affected farmers, who argue that using the 1894 Act denies them fair compensation and subjects them to potential tax liabilities, including a 12.5 per cent reduction due to Tax Deducted at Source (TDS).

Additionally, the tax implications follow a recent government move to lower the guidance value of PRR properties, intensifying worries about the adequacy of compensation.

Business Corridor Project

This ambitious project is set to feature 16 flyovers, 10 overpasses, and 12 underpasses, enhancing the city's transportation network. Additionally, the plan includes bridges over seven water bodies, including prominent ones like Chikkatogur Lake, Gunjur Lake, and Jarakabande Lake, further facilitating seamless connectivity.

To tackle traffic intricacies, the project incorporates six cloverleaf-type over bridges, providing a solution for efficient crisscrossing without congestion.

Designs made public by the BDA showcase a 100-metre-wide greenfield expressway, featuring green spaces, utilities, underground cables, footpaths, cycle tracks, and drains.

The main carriageway, boasting eight lanes, will be flanked by service roads on both sides, with a broad median reserved for possible future integration with the metro project.

The project covers 65.95 km between Hosur Road and Tumakuru Road, with an additional 3.4 km near Madanayakanahalli and 4.08 km near Hebbagodi to link existing roads seamlessly into the PRR network.