Tds deducted u/s 194j
This query is : Resolved
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?
03 June 2015
it seems to be a mistake on the insurance company's end
03 June 2015
ITS BY MISTAKE SHOW WRONG SECTION.
03 June 2015
Ok , Then do advice me what to do now? And how should I consider tax liability on such claim?
03 June 2015
Ok , Then do advice me what to do now? And how should I consider tax liability on such claim?
27 July 2025
Regarding the TDS deducted by the insurance company **under Section 194J** on the insurance claim received for fire damage:
---
### 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.
---
### 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.
---
### 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 |
---
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?
---
### 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.
---
### 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.
---
### 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 |
---
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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