Compensation under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (“the 2013 Act” or “LARR Act”) is not a single figure plucked from a valuation report. It is an architecture — a set of statutory heads that are computed in a fixed sequence, and which compound upon one another.

Understanding that sequence matters because two of the heads — the multiplier factor and the 100% solatium — operate as multipliers, not mere additions. The order in which they are applied is therefore not academic; it determines whether a landowner receives roughly twice, or closer to four times, the bare market value of the land.

This article walks through the build-up head by head, offers a clean worked illustration on round hypothetical numbers, and explains why the LARR Act, 2013 architecture routinely produces two to three times the outcome that the old Land Acquisition Act, 1894 delivered — an architecture that, after 2015, now governs even National Highways and Railways acquisitions.

This is the first spoke in a nine-part series on fair compensation in Indian land acquisition; see Fair Compensation in Indian Land Acquisition: LARR, Railways and National Highways — A Practitioner’s Map for the full map across all three statutes.

Head 1 — Market value under Section 26

Everything begins with market value, fixed under Section 26 of the LARR Act, 2013. The Collector determines it as the higher of the following, whichever yields more to the landowner:

• Section 26(1)(a) — the market value, if any, specified in the Indian Stamp Act, 1899 for the registration of sale deeds in the area, i.e. the jantri / ready-reckoner (guideline) value; or
• Section 26(1)(b) — the average sale price for similar type of land situated in the nearest village or vicinity, worked out from the sale deeds registered in the preceding three years; or
• the consented amount, where land is acquired under s.11 by agreement or for private companies / PPP with consent.

The Explanation to s.26 refines s.26(1)(b): the “average sale price” is ascertained by taking one-half of the total number of sale deeds in which the highest prices have been mentioned — that is, the top 50% of exemplars — and averaging those. Low-value distress or collusive sales in the bottom half are thereby excluded, so the average is pulled upward toward genuine market prices.

A recurring litigation point is the status of the jantri figure. The jantri is a floor, not a ceiling: because s.26 mandates the higher of (a) and (b), a robust set of sale deeds under (b) will displace a stale guideline value. But the jantri is not to be treated as proof of true market value in its own right — guideline registers have “no statutory base” for fixing compensation and ready-reckoner rates are struck for stamp duty, not acquisition (Jawajee Naganatham v. Revenue Divisional Officer, (1994) 4 SCC 595). Equally, s.26(1)(b) cannot be computed off a single deed of dissimilar land; multiple comparable deeds are required, failing which the court falls back to s.26(1)(a) (Project Director, NHAI v. Alfa Remidis Ltd., 2026 INSC 480).

Head 2 — The multiplier factor: Section 26(2) and the First Schedule

Once the base market value under s.26(1) is fixed, Section 26(2) read with the First Schedule applies a multiplier factor to it:

• 00 for land acquired in urban areas; and
• a factor rising up to 00 for land in rural areas, graded by distance of the project from the urban centre (the greater the distance, the higher the factor, subject to the 2.00 ceiling).

This is the first of the two compounding steps. The multiplier is applied to the market value before solatium is added, so a rural claimant at factor 2.00 already sees the s.26 value doubled at this stage.

Head 3 — Value of assets attached to the land: Sections 29 and 28

Land is rarely bare. Section 29 requires the Collector to separately assess and add the value of things attached to or standing on the land — trees, plants, standing crops, houses, buildings and other immovable structures, and wells. These are valued on their own footing (replacement/market value of the asset) and added to the compensation; Section 28 lists the assessment of standing crops and trees among the mandatory parameters the Collector must take into account.

The asset value is added to the market-value-times-factor figure to arrive at the total compensation on which solatium is then computed.

Head 4 — Damage: severance and injurious affection under Section 28

Where only part of a holding is taken, the acquisition may damage the remaining land — by cutting it off (severance) or by reducing its utility or value (injurious affection). Section 28 directs the Collector to take into account the damage sustained by reason of severing the acquired land from the owner’s other land, the injurious affection to other property (movable or immovable) or earnings, and the diminution of profits between notification and possession.

These are genuine, separately compensable heads and can be substantial where a linear project — a highway or a canal — slices through a field. Because the quantification of severance and injurious affection raises distinct valuation questions, this series addresses them in depth in spoke 7; here it is enough to record that they sit within the s.28 parameters and add to the corpus before solatium.

Head 5 — Solatium at 100%: Section 30 and the First Schedule

Section 30, read with the First Schedule, awards solatium equal to one hundred per cent (100%) of the compensation amount. Solatium is the statutory recognition of the compulsory nature of the acquisition — the owner is being made to part with land against his will — and it is calculated on the aggregate of the preceding heads (market value × factor, plus assets, plus damage).

This is the second, and larger, compounding step. Because solatium is 100% and is computed on a base that already includes the doubled rural market value and the asset/damage heads, it effectively doubles the entire corpus built up so far.

Head 6 — Additional amount of 12% per annum: Section 30(3)

Section 30(3) grants an additional amount calculated at twelve per cent (12%) per annum on the market value, for the period from the date of the preliminary notification under Section 11 until the date of the award or the date of taking possession, whichever is earlier.

This head compensates the owner for the time value of the land during the pendency of the acquisition process. It is computed on the market value (as fixed under s.26) for the notification-to-award/possession interval and added to the corpus.

Head 7 — Interest on delayed payment: Section 80

Finally, Section 80 deals with delay in actually paying the compensation after possession. Where the awarded amount is not paid or deposited on or before taking possession, interest runs:

• at 9% per annum from the time of taking possession until payment; and
• at 15% per annum for any period beyond one year from the date of taking possession until payment.

Section 80 interest is distinct from the s.30(3) additional amount: the latter runs up to award/possession, the former runs after possession until the money actually reaches the owner. Together they ensure the State bears the cost of delay at both ends of the process.

A worked illustration of the build-up

The numbers below are illustrative only, chosen as round figures to expose how the multiplier and solatium compound. They are not a valuation of any real acquisition.

Assume a rural parcel of 1,000 sq. m with a determined market value of Rs 2,000 per sq. m under s.26, a distance-based factor of 2.00, trees and a well worth Rs 5,00,000, and severance damage of Rs 3,00,000. Assume the s.11 notification preceded the award by 1 year.

On these figures a bare market value of Rs 20,00,000 becomes a total award of roughly Rs 1.008 crore — about five times the raw land value on these particular assumptions, driven chiefly by the interaction of the 2.00 factor and the 100% solatium. Section 80 interest (9%, rising to 15% after a year) would be added on top of this only if the amount were not paid on possession — it is not part of the award figure itself.

Note the order: solatium at Step 5 is charged on the already-doubled, asset-inclusive corpus of Step 4, which is why the two multiplicative heads reinforce each other rather than merely adding.

Why this doubles or triples the 1894-Act outcome

Under the Land Acquisition Act, 1894, the compensation heads were market value under s.23(1) (with severance and injurious affection), solatium at 30% under s.23(2), and interest under s.28. The LARR Act, 2013 changes the arithmetic at two decisive points:

1. It introduces the multiplier factor (up to 2.00 in rural areas) that has no equivalent in the 1894 Act — an entirely new step that can double the market-value base before anything else is added; and
2. It raises solatium from 30% to 100%, and charges it on that enlarged base.

The combined effect of a fresh doubling step and a solatium rate more than three times higher is what produces awards that are, in rural cases, commonly two to three times (and, as the illustration shows, sometimes more) the equivalent 1894 outcome — before even accounting for the s.26(1)(b) top-50% averaging that tends to lift the market value itself above stale guideline figures.

The same architecture now governs NH and Railways acquisitions

Historically, acquisitions under the National Highways Act, 1956 and the Railways Act, 1989 stood outside this architecture — s.3J of the NH Act expressly excluded the 1894 Act, denying even solatium and interest to highway landowners.

Two developments closed that gap. First, in Union of India v. Tarsem Singh, (2019) 9 SCC 304, the Supreme Court held s.3J of the NH Act unconstitutional insofar as it denied solatium and interest, as violative of Article 14 — so solatium and interest reach even NH-Act land. Second, the RFCTLARR (Removal of Difficulties) Order, 2015 dated 28-08-2015 (issued under s.113(1) read with s.105(3)) extended the compensation, R&R and infrastructure benefits of the First, Second and Third Schedules to the thirteen Fourth-Schedule enactments — expressly including the National Highways Act, 1956 and the Railways Act, 1989 — deemed effective 01-01-2015.

The practical result is that the seven-head architecture described above — market value, multiplier, assets, damage, 100% solatium, 12% additional amount and delay interest — now supplies the compensation standard across highway and railway acquisitions too. Spoke 5 in this series examines that cross-over regime in detail.

Key takeaways

• Compensation under the LARR Act, 2013 is built in a fixed sequence of heads; the order matters because the multiplier and solatium compound.
• Market value (s.26) is the higher of jantri/stamp value (26(1)(a)) or the average of the top 50% of sale deeds over the preceding three years (26(1)(b), Explanation), or the consented amount.
• The multiplier factor (s.26(2), First Schedule) is 1.00 urban and up to 2.00 rural by distance — a step with no 1894-Act equivalent.
• Assets (s.29) — trees, crops, houses, wells, structures — and severance / injurious affection (s.28) are separately added before solatium.
• Solatium is 100% (s.30), computed on the whole corpus, so it effectively doubles it — against just 30% under the 1894 Act.
• A 12% p.a. additional amount (s.30(3)) runs from the s.11 notification to award/possession; s.80 interest (9%, then 15% after a year) runs from possession until payment.
• Post-2015, this architecture governs NH and Railways acquisitions too, following Tarsem Singh and the 2015 Removal of Difficulties Order.

Frequently asked questions

Is the jantri (guideline) value the maximum I can get?

No. Section 26 mandates the higher of the jantri value and the sale-deed average, so a strong set of comparable sale deeds under s.26(1)(b) can — and often does — displace a stale jantri figure. The jantri operates as a floor, not a ceiling.

Does the 100% solatium under the LARR Act, 2013 apply to the land value alone?

No. Solatium under s.30 is charged on the aggregate corpus — market value after the multiplier, plus the value of assets under s.29, plus s.28 damage — which is why it has such a large effect on the final figure.

What is the difference between the 12% additional amount and Section 80 interest?

The 12% p.a. under s.30(3) runs from the s.11 preliminary notification up to the award or possession. Section 80 interest (9% p.a., rising to 15% after one year) runs after possession until the compensation is actually paid. They cover different periods and are both payable where applicable.

Do highway and railway landowners get the same compensation package under the LARR Act, 2013?

Broadly yes. After Tarsem Singh, (2019) 9 SCC 304 and the 2015 Removal of Difficulties Order, the 2013 Act’s compensation schedules extend to National Highways Act and Railways Act acquisitions. Spoke 5 addresses the mechanics.

Sources & authorities

• RFCTLARR Act, 2013 — ss. 11, 26 (incl. 26(1)(a), 26(1)(b) and Explanation), 26(2), 28, 29, 30 and 30(3), 80, 105(3), 113; First, Second, Third and Fourth Schedules
• Land Acquisition Act, 1894 — ss. 23(1), 23(2), 28 (historical baseline)
• National Highways Act, 1956 — s. 3J; Railways Act, 1989 — Chapter IVA
• RFCTLARR (Removal of Difficulties) Order, 2015, dated 28-08-2015 (u/s 113(1) r/w s.105(3)), deemed effective 01-01-2015
• Jawajee Naganatham v. Revenue Divisional Officer, (1994) 4 SCC 595
• Project Director, NHAI v. Alfa Remidis Ltd., 2026 INSC 480
• Union of India v. Tarsem Singh, (2019) 9 SCC 304

All authorities independently verified on 20 July 2026.

This article is general information, not legal advice; for advice on a specific acquisition, consult Bhatt & Joshi Associates.

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