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.

  

EXAM QUESTION

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.

-a-

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

-ea-

 

 

 

 

  1. Income Tax
  2. Income from Other Sources
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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