We received compensation from court in motor car accident case of Rs.10,00,000/- which includes Rs.3,00,000/- interest and balance principal. Now my question is do i have to show this entire amount as my income or only interest portion?. Under which head it will be taxable? Is there any exemption or deduction available to me under the Act? Plz rpl at the earlist so that i can pay my advance tax if any on time. Thank you.
Dear sir,
Already the advance tax due dates are over( Only March due is remaining). So I would advise you to deposit the amount in such a way that you will get more interest than what will be levied u/s 234 b & c.
Further, I don't think that compensation will be treated as your income as it comes from an insurance claim.
Dear sir, we received this compensation in 1st week of Feb so only option remains is last instalment of Advance tax in March. Can i show interest portion under Income from Other sources and claim Deduction under Section 57 for 50% amount?. In that case only Rs.150000 (300000/2) woulsd be taxable.
Reply at the earliest.
1. your principal amount of compensation INR 7L is exempt from tax.
2. interest portion of INR 3 L is taxable but a flat 50% deduction is available u/s 57 hence INR 1.5L is taxable u/s 56 (2)(viii) that is taxable under the head "Income from Other Sources)
hope your could would be cleared
Thank you sir
Shyam Joshi & Associates
Pune
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