TDS on Death Compensation to Dependants

This query is : Resolved

N.GOVIND (Querist)
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27 April 2009 Dear Sir/s

Please clarify whether Payment of Death Compensation to Dependants will attract TDS?. If yes, under which Section TDS will be applicable.

Best Regards,

N.Govind.

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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27 April 2009 No TDS.

N.GOVIND

N.GOVIND (Querist)
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27 April 2009 Dear Sir,
Please clarify under which section TDS will not applicable.

Best Regards,

N.Govind.

N.GOVIND

N.GOVIND (Querist)
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27 April 2009 Dear Sir,
Please clarify under which section TDS will not applicable in detail.

Best Regards,

N.Govind

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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27 July 2025 Regarding **TDS on Death Compensation to Dependants**:

* **Is TDS applicable?**
No, **TDS is not applicable** on death compensation paid to dependants.

* **Under which section is TDS not applicable?**
Death compensation paid to dependants is treated as a **compensation** or **gratuity payment** arising out of unfortunate circumstances and is **exempt from tax** under the Income Tax Act.
Hence, it **does not attract TDS** under any section.

* **Reasoning:**
Such payments are generally outside the scope of income chargeable under the Income Tax Act, and therefore TDS provisions do not apply. They are not considered income but compensation for loss.

If needed, you may refer to circulars or ITAT rulings where payments like **compensation, gratuity on death or retirement, and similar ex-gratia payments** have been held non-taxable or exempt.

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