TDS on MACT compensation

No that is not  taxable because one time amount and  for not to cut TDS you have to  file 15H form when amount  paid

Yes the interest is taxable, however there are dissenting views by different high courts on the matter and further it depends on case to case basis.

what is MACT Compensation

MOTOR ACCIDENTS CLAIMS TRIBUNAL

Yes. Interest part is taxable because it may be considered as income. However, compensation is never an income. So, compensation awarded by the Tribunal (MACT) is not taxable.

TDS ON MACT INTEREST IS TAXABLE BUT THE LIMIT IS 50,000/- IF INTEREST IS MORE THAN 50,000 THAN TDS MUST BE DEDUCTED.....

See Section 194A(3)(ix) of the Income Tax Act 1961.

The principal amount of compensation awarded by the MACT is not taxable, as it is not 'income' within the meaning of Section 2 (24) of the Income Tax Act 1961.

Interest on MACT Compensation is fully  taxable as ' Income from Other Sources' . The rate applicable will be the appropriate slab-rate.

Sir,

There is lof of confusion on TDS on MACT Interest. It is clear that it is taxable.

But the problem is for Insurance Companies....

Some company  prepare cheque for amount of TDS deducted and give these cheques to MACT COURT along with award amount cheque.......

Some deposit TDS amount with INCOME TAX 

Who is right.... 

In first case the claimant get both amount instantly from MACT i.e. award amount+Interest and TDS amount

In another case the claimant get only Award amount + Interest anf for TDS amount he is given FORM16A  and he has to file return with Income Tax to get it refund.....

Is there any judgement in this regard ... if any please provide.... 

I am aware of some judgement in which judge writes in judgement that TDS amount deducted should be deposited with court... In some judgement judge instruct not to deduct TDS....

please guide us in this matter......

The issues now raised are different from those which had been raised in the original query, which was whether the Compensation was taxable at all.

Regarding the aspects of TDS from the interest part, the latest available decision appears to be of  the HIGH COURT OF ALLAHABAD in CIT v.Oriental Insurance Co. Ltd. (IT Appeal Nos. 441 of 2006 & 398 of 2009IT Appeal Defective Nos. 279, 281, 284 & 285 of 2006) ordered on September 13, 2012, a copy of which is attached.

Pl note that the decision was on the basis of the law as it had stood before the amendment of Section  194A(3) wef 1-6-2003.

After the amendment of S.194A(3) wef 1-6-2003, there cannot be any doubt that the Insurance company is liable to deduct tax as provided in the Income Tax Act, and no MACT is empowered to order against the express provision in the Act.

is the interest amount taxable as per the current laws standing??

is the exemption limit of 50,000 per year or is a accumulated limit for exemption for all the years put together??

thanks in advance