No income tax or TDS on payouts under 2013 land acquisition law, says Centre.

Tax Exemption Granted on Compensation for National Highway Land Acquisition.

Landowners and farmers whose land is acquired for national highway projects will receive significant relief, as the Union government has clarified that such compensation will be exempt from income tax and stamp duty. The Union road transport ministry has directed all national highway–owning agencies to ensure that no tax deduction at source (TDS) is made on these compensation payments. In a circular issued to agencies, including the National Highways Authority of India (NHAI), the ministry stated that compensation paid for land acquired under the National Highways Act, where valuation is done as per the land acquisition law of 2013, will be treated as fully exempt from income tax. During the 2025–26 financial year, nearly ₹20,000 crore was disbursed to acquire over 10,000 hectares of land for highway development. The clarification also cites an earlier circular issued by the Central Board of Direct Taxes, reaffirming that such compensation is non-taxable even without a specific provision, ensuring uniform compliance across agencies.