Compensation-Taxable Under Income from Capital Gains
Interest on Compensation- Taxable Under Income from Other Sources(50% deduction also)
- Compensation received is covered under income from capital gains.
- However sometimes this compensation is received late on which interest is received
- Sometimes compensation is Enhanced on court order on which interest is also received
- The interest on compensation or enhanced compensation is covered under Income from other sources.
- 50% Deduction is available on this income under section 57.
Interest on enhanced compensation received by Mr.G during the previous year 2015-16 is Rs 5,00,000.
Out of this interest,
Rs 1,50,000 relates to the previous year 2011-12,
Rs 1,65,000 relates to previous year 2012-13 and
Rs 1,85,000 relates to previous year 2013-14.
Discuss the tax implication, if any, of such interest income for A.Y.2016-17.
Entire Interest of Rs 500000 is taxable in year it is received i.e. PY 2015-16 (A.Y.2016-17)
Also 50% Deduction available i.e 500000*50%=250000
Income from Other Sources=500000-250000=250000