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Now, income tax twist
December, 31st 2009

There is a new twist to the Singur kahani. Something that might ignite fresh trouble this time among "willing" land-losers.  Ironically, neither chief minister Buddhadeb Bhattacharjee nor Trinamool chief Mamata Banerjee has anything to do with this mess. A provision of the Income Tax Act does.

It's a rule that has come as a bolt from the blue to all concerned. Section 194 LA of the I-T Act applies to requiring bodies (WBIDC or KMDA in this case), to deduct 10% tax (at source) from the compensation money paid to land-losers. The compensation amount paid to each land loser should be more than Rs 1 lakh. Even though West Bengal, and many other states weren't even aware of such a provision, which came into effect in 1999 and was withdrawn soon after, the Centre has now implemented it. That, too, with retrospective effect from October, 2004.

When told about the rule, Jahar Das, a land-loser at Bajemelia village off Singur, said, "If the government tries to extract this money from us we shall demand our land back. Das has received around Rs 15 lakhs as compensation. Sushil Mal of Malpara, who after giving up two acres, has now become a daily wager, said he would move court against the government. "I have put my share of Rs 10 lakh in the bank. But my son, who was promised a job, has also turned a daily wager. We feel cheated. There's no question of making more sacrifices."

The official intimation has been conveyed by the Income Tax department (under the ministry of finance) to the state government. And the latter, is especially peeved because its biggest land acquisition amount paid so far has been for the abandoned Nano project at Singur where around Rs 140 crore has been paid to 12,000 land losers for 997 acres.

"The compensation circle for this project is complete and the provision would apply here more than the ongoing aerotropolis project or the Jindal Steel plant or, for that matter, the other steel plants at Purulia and elsewhere," an official at Writers' Buildings confided.

Land and land reforms minister Abdur Rezzak Mollah said, "It's impossible to deduct 10 % from the compensation cheques given to the Singur land-losers. Or, for that matter, any other poor farmer from whom land has been acquired for industry." The minister, known for his loud criticism of the government's land acquisition "haste", added, "Doesn't the Centre realise what kind of impact this would have on the land-losers?"

He was quite right. Krishi Jami Rakhsa Committee convener Becharam Manna, a key person in Mamata's Singur agitation, said, "The farmers who didn't listen to us will now begin their own agitation." Sanat Das of Khaserberi village, now no longer the owner of his acre of land refused to pay "even a paise from my Rs 9.5 lakhs compensation amount."

Bureaucrats at Writers' Buildings have started looking for escape route and counter provisions. A senior official pointed out, "The land-losers can be provided with exemption certificates to prove they don't come under the income tax net." But he didn't know how district magistrates (who also doubles up as the land acquisition officer) would have the exemption certificates issued after each and every land-loser were recalled and made to receive deduction notices.

Economist Dipankar Dasgupta found provision absurd, "How can land-losers be charged for this one-time payment there is no income flow here. Even if the provision is seen as capital gains tax, it doesn't apply to poor farmers."

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