Yes the same will be taxable unde income from other sources. And will be liable to TDS
Taxability of Corpus- Hardship compensation received in case of redevelopment
I am the owner of the flat in Mumbai (along with the property card now transferred in my name- transferred by inheritance.) Our building is now going for redevelopment and under the Development Agreement, we will be getting certain hardship compensation - the question is weather this hardship compensation will be taxable and will be subjected to TDS provisions.
Asked 14 days ago in Capital Gains Tax
Taxability of Hardship Compensation (Mumbai Redevelopment)
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Not Taxable: Hardship compensation received by flat owners for inconvenience during redevelopment is generally treated as a capital receipt, hence not taxable (e.g., Pushpa R. Chawla vs. ITO – ITAT Mumbai).
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No TDS Required: Courts (e.g., Sarfaraz S. Furniturewalla case) have held TDS is not applicable on such compensation, as it's not income.
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However: Some developers still deduct TDS under Section 194IC out of caution. If deducted, you can claim a refund when filing your income tax return.
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