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Compensation
Is motor accident compensation from State govt is taxable or not? and if it's not taxable then under which section it's exempt?
Replies (2)
Taxability of Compensation
The issue of taxation in case of compensation for motor accident depends on the question whether the receipt is Capital or Revenue receipt in the hand of recipient. If the person who has been given any compensation for motor accident or any accident , is permanently disabled because of accident , such receipt is considered as Capital receipt which is not taxable. Whereas , if the disablement is temporary, payment of claim in that case is taxable.
it is permanent disability.so in which section it is exempt?
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