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. Kindly explain in detail with relevant provisions of the I.T.Act.

Best Regards,

N.Govind.

CA CS CIMA Prakash Somani

CA CS CIMA Prakash Somani (Expert)
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27 April 2009 The rate at which deceased would have taxed.

taxindiaconnect

taxindiaconnect (Expert)
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01 May 2009 I understand that the query is in relation to a death compensation other then employment. In this regard we need to see the section 10 (10BC ) of the IT Act 1962 which provides that any compensation received or receivable from the Central Government or a State Government or a local authority by an individual or his legal heir by way of compensation on account of any disaster, except the amount received or receivable to the extent such individual or his legal heir has been allowed a deduction under this Act on account of any loss or damage caused by such disaster.

Explanation.--For the purposes of this clause, the expression "disaster" shall have the meaning assigned to it under clause (d) of section 2 of the Disaster Management Act, 2005(53 of 2005);]2
The disaster management Act defines a disaster as– “catastrophe, mishap, calamity or grave occurrence in any area, arising from natural or man made causes or by accident or negligence which results in substantial loss of life of human sufferings or damage to , and destruction of property, or degradation of, environment and is of such nature or magnitude as to beyond the coping capacity of the community of the affected area”.

If your query is intended for such compensation, No TDS is required to be deducted as the income is exempt from tax in the hands of the relative.

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