DISABLE PERSON LIABLE TO PAY TAX
N.J. MISHRA
(Querist) 05 February 2011
This query is : Resolved
PLEASE MEMBER KINDLY ADVISE ME,
ONE OF OUR EMPLOYEE (EMPLOYED ON CONTRACT BASIS) WAS EMPLOYED ON FOREIGN FLAG SHIP AS A CADET, HE SUFFERED RENAL FAILURE, LAST WEEK HE UNDER WENT KIDNEY TRANSPLANT AT JASLOK HOSPITAL. ALL THE EXPENSES WAS INCURRED BY THE COMPANY. AS PER THE CONTRACT THE COMPENSATION WOULD BE PAID ONLT TO THOSE ILLNESS OR INJURY ARISES OUT OF THE COURSE OF EMPLOYMENT AND ARE WORK RELATED. ACCORDINGLY HE IS NOT ENTITLE FOR ANY COMPENSATION AS THE NATURE OF ILLNESS IS NOT WORK RELATED. NOW THE COMPANY ON HUMANITY GROUND WANTS TO GIVE HIM COMPENSATION TO HIM. THE CADET HAS BEEN DECLARED AS A UNFIT AND PERMANENT DISABLED. MY QUERY IS THAT THE AMOUNT OF COMPENSATION WOULD BE TAX FREE OR LIABLE TO TAX. WHAT WILL BE THE PERCENTAGE OF AMOUNT OF AMOUNT WILL BE PAID AS A TAX. THE COMPANY WOULD DEDUCT THE TAX AMOUNT OR THE CADET WILL LATER PAY THE TAX ONCE THE D.D. HAS BEEN ISSUED TO HIM. WHAT SEC. WOULD BE APPLICABLE IF HE IS ENTITLE TO PAY TAX.
A V Vishal
(Expert) 05 February 2011
Unfortunately there is no provision in the income tax act where the similar payment to employee is exempt from tax. The tax is to be treated as salry and taxed accordingly.
Rajesh Thakker
(Expert) 05 February 2011
However, the cadet can claim a deduction u/s 80U of the Income-tax Act from the compensation amount.
N.J. MISHRA
(Querist) 05 February 2011
WHETHER KIDNEY FAILURE AMOUNTS TO DISABILITY AND CAN AVAIL DEDUCTION U/S. 80 U OF THE ACT
H.M.Patnaik
(Expert) 05 February 2011
Yes. Deduction U/s. 80U can be claimed if the assessee suffers from permanent disability due to Kidney failure by observing the procedure prescribed therein.
