Compensation to employee

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This query is : Resolved

Abhijit Sawarkar (Querist)

13 September 2012 If compnay is paying compensation to employee to disability in accidenet. whether company has to deduct TDS amount from is compensation amount

CA Sripal Jain

CA Sripal Jain (Expert)

13 September 2012 No it wont attract,i dont see any seperate chargability section

Abhijit Sawarkar

Abhijit Sawarkar (Querist)

13 September 2012 will it not be be part of salary? As he was my employee and had accident during employement. I am paying him Rs. 500000 Lacs toward compensation, as same will be taxable under head salary in his hand.

We deduct TDS during full and final settlement also. I am finding this in similar nature.

Please express your view.

CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)

14 September 2012 Any emoluments from employer is taxable as salary in the hands of employee unless exempted. No provision exempts this compensation.

Praveen Kumar Rathi

Praveen Kumar Rathi (Expert)

14 September 2012 Yes TDS should be deducted on compensation part also.

Abhijit Sawarkar

Abhijit Sawarkar (Querist)

15 September 2012 Is anyone aware that if this compensation is provided under "Employee compensation Act", wehther same will be expempted under section 10(10B).

Section 10(10B) deplicts that "any compensation received by a workman under the Industrial Disputes Act, 1947 (14 of 1947), or under any other Act or Rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, 54[at the time of his retrenchment" is exepmt.

Shall we consider "Any other Act" as base of expmtion. My view is "NO" but do we have any conter view.

CA VISHNU GAVKARE

CA VISHNU GAVKARE (Expert)

15 September 2012 That is in relation to retrenchment. Further dispute act is different from compensation act.

CA Sripal Jain

CA Sripal Jain (Expert)

17 September 2012 As per Vinod kumar v/s ITO case.32 ITD 254,it was held that compensation received in case of accident is exempt provided he is disabled,say if its a temporary disablement ,proportionate amount is exempt,therefore one needs to see whether is it a disablement,if thts the case there is no TDS whatsover,however if no disablement then neither section 17 or any of the provisions of section 192 wil apply

Abhijit Sawarkar

Abhijit Sawarkar (Querist)

17 September 2012 Dear Sripal,

Case you refereed is Motor accident case & insurance company paid compensation.

In my case, I am employer and paying his as compensation as accident was during employment (Partial disable).

Aforesaid case concludes that:

"The facts before us clearly show that the assessee in all fairness and in a bona fide manner based upon in actual happenings in life made disclosure of the amount of Rs. 34,143 received from the insurance company for temporary disablement proved by necessary documents. This amount was, on the facts of the case, capital receipt and not taxable and includible in the total income of the assessee. The Income-tax Officer, therefore, reached a correct conclusion that the amount was not includible in the total income of the assessee. His order could not be said to be erroneous as well as prejudicial to the interest of revenue within the ambit of Section 263 of the Act. We, therefore, cancel the order of the Commissioner under appeal before us."

I am not sure whether same is directly applicable or not.

regards,
Abhijit

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