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Whether TDS is to be deducted on interest on compensation awarded
06-Mar-2025 (In Insurance Law)
Whether TDS is to be deducted on interest on compensation awarded by motor accident claims tribunal w.e.f 01/062015 and compensation received on 20/11/2015, after the tribunal court judgement?
Dear sir,
It depends on the nature of the compensation.
1- Compensation for personal injury or death – Generally, such compensation is exempt from income tax under Section 10(10BC) of the Income Tax Act, so no TDS is deducted.
2- Compensation for business losses or professional damages – This may be taxable and subject to TDS depending on the nature of the payment.
3- Compensation under Land Acquisition Act – If the compensation is for compulsory acquisition of land used for agriculture, it is exempt. Otherwise, TDS may apply under Section 194LA.
Best Regards
Adv Adarsh Kumar
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Adv. Adarsh Kumar
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