For the farmers and land owners of Madhya Pradesh, such a news has come from Bhopal which has created a wave of happiness in the agricultural world of the state. The government led by Chief Minister Mohan Yadav has made revolutionary changes in the land acquisition rules and announced to make the compensation completely tax-free. Now farmers who donate land for government projects will not have to lose a part of their hard-earned money in the form of income tax.

New rule will be implemented from April 1: Both urban and rural lands will benefit

According to the information given by the state government, the entire compensation amount received under the RFCTLARR Act (Land Acquisition Act) will now be out of the purview of income tax. This rule is going to be effective from 1 April 2026. Till now, there was a provision for exemption only on compensation for rural agricultural land, but under the new provisions, the ‘capital gains tax’ levied on compulsory acquisition of urban and commercial land has been completely abolished. This simply means that every penny of compensation received from the government will now go directly into the farmer’s pocket.

Compensation rate doubled, big relief for highways and expressways

The government has not only given tax relief, but has also made the compensation calculation more farmer-friendly. Now, if any type of land (be it fertile or barren) is acquired, compensation will be given double the rate of the Collector Guideline. This is no less than a boon for the farmers coming under the purview of the new highway, expressway and metro projects being built in the state. Now the pain of losing the land will be reduced to a great extent by the huge amount of compensation.

High tension line compensation increased by 200%

The Chief Minister has also shown a big heart for the farmers who are affected by the projects of the Electricity Department. A bumper increase has been made in the compensation for the land which was affected due to high tension lines of 66 KV or more passing over the fields. Earlier this compensation used to be 85%, which has now been directly increased to 200%. This means that now in exchange for installing towers or laying wires, farmers will get more than double the amount than before.

Caution: Tax will have to be paid on interest and rules are not applicable on private deals.

Amidst this big relief, it is also important to understand some technical aspects. Although the basic compensation amount is completely tax-free, but if there is a delay in the payment of compensation and interest is received from the government on it, then that interest will be considered as ‘income from other sources’ and tax will have to be paid on it as per rules. Further, this special exemption will be applicable only in cases of compulsory government acquisition; If a farmer sells his land to a private builder or company, he will not get this benefit.