What is interest on enhanced compensation?
With a view to mitigate the hardship, it is proposed to amend section 145A to provide that the interest received by an assessee on compensation or enhanced compensation shall be deemed to be his income for the year in which it is received, irrespective of the method of accounting followed by the assessee.
What does enhanced compensation mean?
Enhanced compensation refers to a compensation awarded in addition to the initial compensation. This compensation is awarded by the court, Tribunal or other authority. Similar to initial compensation, enhanced compensation is also taxable in the year of receipt.
Is enhanced compensation taxable?
Accordingly, the interest awarded as per section 28 is a part of enhanced compensation only and therefore is not taxable and exempt as any amount of actual compensation/ additional compensation would be under the Income Tax Act.
What is Section 10 37 of income tax?
Under Section 10(37) of the Income Tax Act, Capital Gains on compensation received on compulsory acquisition of urban agricultural land is exempt from tax.
What do you mean by compensation?
Typically, compensation refers to monetary payment given to an individual in exchange for their services. In the workplace, compensation is what is earned by employees. It includes salary or wages in addition to commission and any incentives or perks that come with the given employee’s position.
Is compensation awarded by court taxable?
Enhanced compensation as awarded by courts is taxable under the head ‘Capital Gains’. Interest on compensation as awarded by the courts will be taxable in your hands in the year of receipt of such enhanced compensation under the head ‘Income from Other Sources’.
Is compensatory interest taxable?
If you get interest on top of compensation for the period since you sold the investment (or it matured), you usually need to pay income tax on this part. The business would usually deduct this on your behalf and give you a tax deduction certificate.
Is compensation for damage to property taxable?
22, a capital sum received in respect of damage or injury to the property is taxed on the basis that it is a capital sum derived from an asset. … Compensation is received under an insurance policy in respect of any kind of damage or injury to the property, as well as for the loss or depreciation of the asset (s.
What is section 45 of Income Tax Act?
It is noticed that the amount taxed under sub-section (4) of section 45 of the Act is required to be attributed to the remaining capital assets of the specified entity, so that when such capital assets get transferred in the future, the amount attributed to such capital assets gets reduced from the full value of the …
Is a compensation payment tax free?
The compensation will usually include an element for injury to feelings, although it may include other factors, such as loss of earnings. … If the payment is compensation for injury to feelings arising from discrimination and the discrimination is not related to the termination of employment, it can be paid tax free.
Is compensation tax free?
Compensation for personal suffering and injury is exempt from capital gains (and income) tax. The exemption applies to ‘compensation or damages for any wrong or injury suffered by an individual in his person or in his profession or vocation’.
What is compensation tax?
Compensation – is the tax withheld from income payments to individuals arising from an employer-employee relationship.