Tds on disputed compensation to ex employee

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Chanchal Chanani (Querist)

07 December 2012 Interest is paid to an employee on disputed compensation in an out of court settlement. Employer will deduct TDS on such interest payment under which section?

@VaibhavJ

@VaibhavJ (Expert)

07 December 2012 Hi

Since it is compensation and will fall under 192.

Thanks//Vaibhav
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Chanchal Chanani

Chanchal Chanani (Querist)

07 December 2012 But the interest is not paid because of employer and employee relationship.

V K Bajaj

V K Bajaj (Expert)

08 December 2012 Ms Chanchal!

Let you first put your question rightly and factually.

First you said 'interest is paid' and then you say 'interest not paid'.

Be clear with your question and get the correct solution.

Chanchal Chanani

Chanchal Chanani (Querist)

12 December 2012 Mr V K Bajaj

The fact is interest is paid on the compensation in an out of court settlement. On Mr Vaibhav's reply my question is that the payment of interest is not because of an employer employee relationship. It is paid on the compensation. So why TDS would be deducted u/s 192

@VaibhavJ

@VaibhavJ (Expert)

12 December 2012 Hi

If you refer S/17(3)(iii) it states that:

any amount due to or received, whether in lump sum or otherwise, by any assessee from any person—
(A) before his joining any employment with that person; or
(B) after cessation of his employment with that person.

So in my view TDS to be deducted u/s 192.

Thanks//Vaibhav

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