Tds deducted u/s 194j

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This query is : Resolved

CA Vap Patel (Querist)

02 June 2015 One of my friend suffered severe fire in his shop. He received claim from Oriental Insurance Company. He received TDS certificate, in which TDS is deducted u/s 194J. I want to know why TDS is deducted by insurance company u/s 194J? Which type of professional service is involved in it?

Nikhil Kaushik

Nikhil Kaushik (Expert)

03 June 2015 it seems to be a mistake on the insurance company's end

Rupesh Jain

Rupesh Jain (Expert)

03 June 2015 ITS BY MISTAKE SHOW WRONG SECTION.

CA Vap Patel

CA Vap Patel (Expert)

03 June 2015 Ok , Then do advice me what to do now? And how should I consider tax liability on such claim?

CA Vap Patel

CA Vap Patel (Expert)

03 June 2015 Ok , Then do advice me what to do now? And how should I consider tax liability on such claim?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

27 July 2025 Regarding the TDS deducted by the insurance company **under Section 194J** on the insurance claim received for fire damage:

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### Why is this likely a mistake?

* **Section 194J** applies to **fees for professional services** like consultancy, technical services, legal services, etc.
* An insurance claim compensation is **not a professional service fee**, so **TDS under 194J is not applicable**.
* Typically, no TDS or maybe TDS under Section 194A (interest income) applies, but **not 194J** on insurance claims.

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### What to do now?

1. **Contact the insurance company:**

* Inform them about the wrong TDS section cited.
* Request them to issue a **corrected TDS certificate** (Form 16B or 16A) showing no TDS or correct section (usually no TDS or section 194C if it’s contract payment, but mostly no TDS on claim).

2. **Tax treatment for the claim:**

* Insurance claim amount received for loss of stock/shop is generally **capital receipt** or **business income** depending on your accounting and nature of business.
* It is **taxable** as income under **“Profits and gains of business or profession”** or as **capital gains** if related to assets.
* TDS wrongly deducted should be claimed as refund from Income Tax Department while filing your Income Tax Return.

3. **If insurance company refuses to correct:**

* You can file return claiming the refund of TDS by showing the correct nature of income.
* Attach an explanation in your return about wrong TDS section.
* You can also write to your Assessing Officer for rectification of TDS credit.

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### Summary:

| Point | Action |
| ------------------------------ | ---------------------------------- |
| TDS wrongly deducted u/s 194J | Request correction from insurer |
| Taxability of insurance claim | Taxable under business income |
| Refund of wrongly deducted TDS | Claim refund via Income Tax Return |

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If you want, I can help draft a letter/email to insurance company requesting correction or help you with tax return filing steps for claiming refund.

Would you like that?

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