My friend mom met with accident. Unfortunately she expired. He received 3rd part insurance amount of 10lakhs. Is this taxable or non taxable?
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3rd party insurance taxation
Replies (5)
Quick Summary
Whether it is life insurance or accident insurance???
Not taxable
Accidental Insurance
In case of any claim received by a person on account of death or disability on account of motor accident under Motor Vehicles Act, 1988 then the same is not taxable
Now question arises whether interest payable by insurance companies on account of delay in processing of claims is taxable or not. In various case laws i.e Rupesh Rashmikant Shah. v. UOI (2019) , National Insurance Company Ltd. v. Savitri Devi (2018) , CIT v. Oriental Insurance Co. Ltd. (2013) etc it has been decided by court that even if TDS is deducted by the insurance company on the amount of interest then even interest is not a part of income of the recipient and deducting tax at source cannot govern the taxability of the amount which is being paid. Hence interest received on the amount of compensation (on account of delay in payment of claim amount) is not taxable in hands of recipient.
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