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Insurance Claim received Taxable ???

Nikhil Ts (CA ,CS FINAL) (41 Points)

23 June 2010  

What is the Treatment for a fire insurance claim received or entered in the books as receivable for the purpose of Income Tax,should it be taxed under PGBP or Any other head,and the year of taxability???

The loss has been accounted for in th Profit and Loss Account

 8 Replies

Shailesh (Article) (49 Points)
Replied 23 June 2010

Shudhanshu Agrawal (Business) (2570 Points)
Replied 23 June 2010

As per Section 45(1A) any insurance claim received is taxable under the head capital gain

1 Like

Amir (Learner) (4011 Points)
Replied 23 June 2010

Hi Nikhil

It will be reduced from the WDV of the Block, if in relation to Fixed Asset/Capital Asset 

Otherwise it will be a trading receipt u/s 41(1)

1 Like

Sharad Saini (Student) (286 Points)
Replied 24 June 2010


it will depend on the type of asset for which claim has been recd....

If it is for capital assets then subject to tax under capital gains head, if that asset forms part of a block then claim shall be reduced from wdv of the asset.....

If it is for stock etc then trading receipt

Govind (Professional) (174 Points)
Replied 24 June 2010

Insurance Claim Received/Receivable is just treated like you sold asset and if block of asset is nil at year end then short term capital gain applicable otherwise it shall be reduced from the block of asset,

if the asset is not business asset then normal provisions of capital gains will apply

CA Mayank Tulsyan (B.Com(H), ACA) (274 Points)
Replied 14 August 2010

Insurance claim received is not considered as a transfer but.. despite this it is taxable U/H Capital gains..

The amount of tax will depend on ur block of asset,,, whether the claim is received on entire block or part of a block.. The money received as claim will be treated as if the asset is sold.

Kiresh Shivkar (Practicing CA) (44 Points)
Replied 11 February 2011

Does anyoine have any case laws stating the year of taxability of insurance claim,i.e, stating that insurance claim shall be taxed in the year of granting the amount and not in the year of loss.

Bidya mahanty (any thing ) (21 Points)
Replied 12 August 2014


The loss occured in PY.2011-12 of Rs. 50,00,000/-(Including Raw Material of Rs. 100000) by phailin cyclone . but we received claim from insurance company of Rs.45,00,000 (incld. Rs.800000/- towards Raw material) in the P.Y 2013-14. Can any body help  me the tax impact on whole amount. 


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