NO TDS ON THIRD PARTY CLAIM

Bombay high court has ruled that the insurance companies, while settling third party insurance claims, cannot deduct tax at source (TDS) on the interest earned on the compensation amount. The judges also agreed with the petitioner's argument that they are not liable to pay income tax and so the Tax is not to be deducted. As per the relevant case, a Motor Accidental Claims Tribunal granted the family a compensation of Rs15.61 lakh and an interest of Rs9.25 lakh. As the interest income per year exceeds the limit of Rs50,000, the company wanted to deduct the TDS.