Land Acquisition Compensation Under the 2013 Act

How is land acquisition compensation calculated under the 2013 Act?

Compensation is built up in layers, set out in sections 26 to 30 and the First Schedule of the Act. The Collector first fixes the market value of the land under section 26 as on the date of the preliminary notification under section 11. That market value is multiplied by a factor fixed by the state government, which ranges from 1 to 2 for rural land depending on its distance from urban areas, and is 1 for urban land.

To that figure, the Collector adds the value of everything attached to the land: buildings, structures, wells, trees, standing crops and other assets, assessed under section 29. The resulting total is the compensation. Section 30 then adds a solatium equal to 100% of that compensation, which in practice doubles it. Separately, the landowner gets an additional amount of 12% a year on the market value, from the date of the social impact assessment notification (or the section 11 notification, if earlier) until the date of the award or of taking possession, whichever is earlier.

Where land is acquired under the urgency clause in section 40, the landowner is entitled to a further 75% of the total compensation. Rehabilitation and resettlement entitlements under the Second Schedule are paid on top of all this to families who lose land, homes or livelihoods. These layers are why awards under the 2013 Act are much higher than those under the old Land Acquisition Act 1894, and also why mistakes in any one layer make a large difference.

The compensation formula, line by line

The First Schedule sets out the components of the award. This is how the Collector's calculation sheet is usually laid out.

How is market value fixed under section 26?

Section 26 gives three measures and requires the Collector to take the highest. The first is the minimum value fixed under the Indian Stamp Act for registration of sale deeds in the area, which most people know as the circle rate. The second is the average sale price for similar land in the nearest village or vicinity. The third, which applies only when land is acquired for a private company or a public-private partnership, is the consented amount agreed with landowners.

The average sale price is not a simple average. It is worked out from sale deeds and agreements to sell registered for similar land in the three years before the year of the acquisition, and only the half of those transactions with the highest prices is counted. This rule exists because sale deeds in India are often undervalued for stamp duty, and taking the top half reduces the drag of those low figures.

The section also allows the Collector to disregard transactions that do not reflect the market, and to exclude any price paid as compensation in an earlier acquisition. In practice, the quality of the sale deeds used is where most awards go wrong. A Collector who picks sales of small, distant or differently used plots, or who leaves out recent higher-value sales nearby, ends up with a low figure even though the formula looks correct on paper.

When Advocate B.K. Singh is asked to look at an award, the first document he asks for is the list of sale instances the Collector relied on, with the deed numbers, areas and locations. It is usually there, in the comparison of those deeds with the land actually acquired, that a case for enhancement is either made or lost.

What is the multiplier factor, and why does it matter near cities?

The multiplier recognises that a farmer in a rural area cannot buy equivalent land for the market value alone. The First Schedule allows a factor of 1 to 2 for rural areas, based on distance from the urban area, and the exact factor is notified by each state. For land in urban areas, the factor is 1.

In the NCR this matters a great deal. Land on the edge of Noida, Greater Noida or Ghaziabad may be classed as rural or urban depending on the notified boundaries and the state's notification, and the difference between a factor of 1 and a higher factor can be large in rupee terms. Many states have notified factors below 2 for land close to cities, on the reasoning that market value there already reflects urban demand.

If the Collector has applied a factor of 1 because the land is treated as urban, check the notification and the classification of the village on the date of the section 11 notification. A wrong classification is a clean legal point that can be raised in the reference.

Buildings, trees, crops and other losses

Section 29 requires the Collector to value buildings and structures through a competent engineer, trees and plants through a person experienced in agriculture, forestry or horticulture, and standing crops through people experienced in agriculture. These valuations are often done quickly and cheaply. A house valued at its depreciated construction cost in a fifteen-minute visit can be undervalued by a large margin.

Section 28 lists other matters the Collector must consider, including damage caused by severing the acquired land from the rest of your holding, damage to your other property or earnings, the reasonable expenses of changing residence or place of business, and loss of profits between the notification and possession. Owners rarely press these heads, but where only part of a plot is taken and the remaining strip becomes unusable or loses road access, severance damage can be significant.

Keep your own record before the survey team arrives: photographs of every structure, tube well and tree, bills for recent construction, crop records and a list of fixtures. A landowner who can show the Collector, and later the Authority, what was actually on the land is in a far stronger position than one who disputes the valuation from memory.

Rehabilitation and resettlement: what do affected families get beyond compensation?

Section 31 and the Second Schedule give affected families entitlements on top of land compensation. Under the central Schedule, a family whose house is acquired gets a house (in urban areas, a constructed house of at least 50 square metres plinth area, or a one-time payment of at least ₹1.5 lakh if they decline it). Each affected family can choose between employment for one member, a one-time payment of ₹5 lakh, or an annuity of at least ₹2,000 a month for 20 years, indexed to inflation.

Displaced families also get a subsistence grant of ₹3,000 a month for a year, a one-time transportation cost of ₹50,000 and a one-time resettlement allowance of ₹50,000. Artisans, small traders and families with cattle sheds or petty shops get one-time assistance of at least ₹25,000. Where land is acquired for urbanisation, 20% of the developed land is to be offered to the landowners in proportion to their land, at a price.

"Affected family" is wider than the landowner. It includes tenants, sharecroppers, agricultural labourers and others whose livelihood depended on the land for the three years before acquisition. States can give more than the central Schedule, and some have. The R&R award is made separately under section 31, so check that one has been made and that every eligible member of the family has been included.

The acquisition timeline, and where you can object

Each stage has its own notice and its own chance to object. Missing the early stages does not end your right to compensation, but it does narrow what you can argue later.

1. Social impact assessment (section 4)

   The government notifies a social impact assessment study, with public hearings in the affected area. This is the first chance to put on record what is on the land, who depends on it and why the project should take less. The 12% additional amount starts from this notification. Food security limits on acquiring irrigated multi-crop land apply under section 10. For private companies and PPP projects, the consent of 80% or 70% of affected families respectively is required under section 2(2).

2. Preliminary notification (section 11)

   The government publishes a notification that land is required. The market value is fixed as on this date. From now on, transactions and new encumbrances on the land without the Collector's permission are barred.

3. Objections (section 15)

   Anyone interested in the land can file objections within 60 days of the section 11 notification, on the area and suitability of the land, the justification for the public purpose and the findings of the social impact assessment. The Collector hears the objections and reports to the government.

4. Declaration (section 19)

   The government publishes a declaration that the land is needed for a public purpose, along with the summary of the R&R scheme. The declaration must come within 12 months of the section 11 notification, or the notification lapses unless the period is extended.

5. Notice of claims (section 21)

   The Collector issues a public notice inviting claims for compensation and R&R. File a written claim with documents at this stage, giving your own valuation and sale instances. This written claim matters later, both for the amount and for showing you did not accept the Collector's figure.

6. Award (sections 23 and 25)

   The Collector passes the award, covering the area, compensation and its apportionment. It must be made within 12 months of the declaration, failing which the proceedings lapse unless the government extends the period. Ask for a copy of the award and the calculation sheet the day it is made.

7. Payment and possession (section 38)

   Possession can be taken only after compensation is paid within three months and the monetary R&R entitlements within six months of the award. If you accept the payment, write "accepted under protest" on the receipt if you intend to seek enhancement.

Not happy with the award? Reference to the Authority under section 64

A person interested who has not accepted the award can apply in writing to the Collector to refer the matter to the Land Acquisition, Rehabilitation and Resettlement Authority. The objection can be to the measurement of the land, the amount of compensation, the person to whom it is payable, R&R rights, or apportionment among the persons interested. The Collector must make the reference within 30 days; if he does not, you can apply to the Authority to direct him to do so.

The time limit is short. If you were present or represented before the Collector when the award was made, the application must be made within six weeks of the award. In other cases, it is within six weeks of receiving the Collector's notice of the award, or within six months of the award, whichever ends first. The Collector can entertain an application within a further year if there was sufficient cause for the delay.

Accepting the money does not end your right to a reference, as long as you accept it under protest and apply in time. What does end it is signing a receipt that says the amount is accepted in full satisfaction without protest, or letting the six weeks run out. The reference is the real chance to increase compensation, because the Authority hears evidence: sale deeds, valuers, the patwari or lekhpal, and witnesses on the use and potential of the land.

Evidence that raises compensation in a reference

Enhancement cases are won on evidence, not on argument about fairness. These are the documents that matter most.

Appeal to the High Court under section 74

The requiring body or any person aggrieved by the Authority's award can appeal to the High Court within 60 days of the award, and the High Court can allow a further 60 days for sufficient cause. Courts have differed on whether delay beyond that can be condoned, so treat 120 days as the outer limit and file well within it.

The High Court looks at whether the Authority applied the right legal tests: whether the sale instances used were truly comparable, whether appropriate deductions were made for development costs when large tracts were valued from small plot sales, whether the multiplier and solatium were correctly applied, and whether evidence was ignored. It is an appeal on fact and law, but the High Court does not lightly disturb a well-reasoned valuation.

Remember that the government or the requiring body can also appeal, and often does when the Authority grants a large enhancement. A landowner who wins in the reference should be prepared to defend that award in the High Court and, sometimes, in the Supreme Court. Our Supreme Court practice page and our post on special leave petitions explain that last stage.

Interest on delayed payment and on enhanced compensation

If compensation is not paid or deposited on or before taking possession, section 80 requires the Collector to pay interest at 9% a year from the date of possession until payment for the first year, and 15% a year after that. This applies to the amount that should have been paid, and it runs automatically; it does not depend on a separate claim, though you may have to point it out.

When the Authority or a court enhances compensation, the enhancement carries its own solatium and 12% additional amount, and interest on the excess from the date of possession until it is paid. Collectors sometimes pay the enhanced principal and omit the solatium, the additional amount or the interest on the enhanced figure. Check every head against the order and write to the Collector with a calculation if anything is missing; if that fails, file for execution of the award.

Who gets the money? Apportionment and disputes within the family

When more than one person claims the compensation, such as co-owners, heirs, a mortgagee, or a buyer under an unregistered agreement, the Collector apportions it in the award if the parties agree, and otherwise the dispute goes to the Authority. Where there is a dispute about entitlement, the Collector can deposit the money with the Authority instead of paying anyone, and it stays there until the dispute is decided.

In NCR families, the most common problem is that the revenue record has not been updated after the death of the recorded owner, or that land has been informally divided among brothers without a partition. Both can freeze the payment. Settle the family position and get it recorded, through mutation or a registered family settlement or partition, before the award if you can. Our posts on partition suits for ancestral property and a daughter's share in ancestral property explain the entitlements that often decide these disputes.

A person who holds land under a general power of attorney or an agreement to sell, without a registered sale deed, does not have title, and the Collector will usually pay the recorded owner. Such buyers have to sort out their rights with the seller, in a civil court if needed, which is one more reason to complete registration before an acquisition is notified.

Old acquisitions under the 1894 Act: section 24 and lapse

Section 24 deals with acquisitions begun under the Land Acquisition Act 1894. If no award had been made under the old Act by 1 January 2014, compensation is determined under the 2013 Act. If an award had been made five years or more before that date, section 24(2) provides that the acquisition lapses where physical possession has not been taken or compensation has not been paid.

The Constitution Bench of the Supreme Court in Indore Development Authority v Manoharlal (2020) settled how this works. The "or" in section 24(2) is to be read as "nor": the acquisition lapses only if both possession has not been taken and compensation has not been paid. Tendering the compensation is enough to count as payment, even if the owner refused it, and failure to deposit it in court does not cause a lapse, though owners of a majority of holdings whose compensation was not deposited may get compensation under the 2013 Act. Many lapse claims filed in Delhi and elsewhere before 2020 failed after this judgment.

If you still hold land under an old acquisition, the questions are factual: was possession actually taken (usually shown by a possession memo or panchnama), and was the money tendered? These need the old acquisition file, which can be obtained from the Land Acquisition Collector's office or through RTI, as our post on RTI applications and appeals explains.

Highways, railways and acquisitions under other laws

Section 105 and the Fourth Schedule exempt thirteen central laws from the 2013 Act, including the National Highways Act 1956, the Railways Act 1989, the Metro Railways (Construction of Works) Act 1978 and laws for electricity, atomic energy and petroleum pipelines. From 1 January 2015, however, the government extended the 2013 Act's provisions on compensation and R&R to acquisitions under these laws. So the market value, multiplier and solatium rules generally apply to them too.

The procedure for challenging the amount is different. Under the National Highways Act, for example, the competent authority determines compensation under section 3G, and a landowner who disagrees applies for arbitration by an arbitrator appointed by the Central Government, usually a senior revenue officer. The arbitrator's award can then be challenged under section 34 of the Arbitration and Conciliation Act 1996, as our post on challenging an arbitral award explains. The Supreme Court held in 2019 that landowners under the highways law are entitled to solatium and interest like other landowners.

Acquisition in Delhi, Noida and Ghaziabad: practical points

In Delhi, acquisitions are handled by the Land and Building Department of the Delhi government, with Land Acquisition Collectors attached to the revenue districts. Much of Delhi's recent land assembly has moved towards the DDA's land pooling policy, which is voluntary and governed by its own terms rather than the compensation formula in this post. In UP, development authorities such as the Noida Authority, the Greater Noida Authority, YEIDA and the GDA often buy land directly from farmers by mutual agreement under state rules. An agreed purchase gives you what the agreement says; the reference and appeal remedies in this post apply to compulsory acquisition, not to a voluntary sale.

Under section 96 of the 2013 Act, no income tax or stamp duty is levied on an award or agreement under the Act, except agreements under section 46. The CBDT clarified this in 2016. The Income-tax Act 2025 has applied from 1 April 2026, so confirm the current treatment with a tax adviser before you file your return. Section 101 also provides that land not used for five years from possession should be returned to the original owners or their heirs, or to the state's land bank, which matters for acquisitions where the project never came.

Mistakes landowners make

• Accepting the money without protest. Signing a receipt without writing "under protest" can be treated as acceptance of the award and cost you the reference.
• Missing the six weeks. The time for seeking a reference runs from the award if you were present or represented. Waiting to see what neighbours do often means missing it.
• Not filing a claim under section 21. A written claim with your valuation and sale instances shows the Collector, and later the Authority, what you asked for and why.
• Relying on general complaints about low rates. The Authority enhances on evidence: comparable sale deeds, earlier awards for nearby land, valuation reports. Bring them.
• Leaving the family record unsettled. An unrecorded inheritance or informal division can freeze the payment in a deposit for years.
• Ignoring the R&R award. Families focus on land compensation and forget the employment, annuity, housing and grants they are entitled to under the Second Schedule.

What to do this week if your land is being acquired

• Get copies of every notification so far: SIA, section 11, section 19, and any section 21 notice.
• Check the revenue record and make sure every co-owner and heir is correctly recorded.
• Photograph every structure, tree, well and crop on the land, with dates.
• Collect certified copies of recent sale deeds of comparable land in your village and the next.
• File objections or a written claim if the relevant stage is still open.
• When the award is made, get the award and calculation sheet, and diarise six weeks from that date.
• If you accept payment, write "accepted under protest" on the receipt and keep a copy.

Getting the award reviewed

Land acquisition compensation is one of the few areas where a well-prepared case can change the figure substantially, because every layer of the formula moves with the market value. It is also an area with short, strict time limits. For civil and property disputes linked to the land, such as partition or title, see our civil and property lawyer page.

If you want an advocate to read the award and calculation sheet before the six weeks run out, the team of Advocate B.K. Singh at B.K. Singh & Associates can look at the papers and tell you the deadline and whether a reference is worth pursuing. You can send them through the online enquiry page.