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What percentage of income from compensation on disaster is exempted from tax liability? 1. 100% 2. 75% 3. 50% 4. 25%

What percentage of income from compensation on disaster is exempted from tax liability? 1. 100% 2. 75% 3. 50% 4. 25% Correct Answer 1

Compensation on account of any disaster :

  1. Any amount received from the Central Government or State Government or a Local Authority by an individual or his legal heirs as compensation on account of any disaster is 100% exempt from tax.
  2. However, no deduction is available in respect of the amount received or receivable to the extent such individual or his legal heirs has been allowed a deduction under the Act on account of loss or damage caused due to such disaster.
  3. Disaster here means any disaster due to any natural or man-made causes or by accident/negligence which results in substantial loss of human life or damage to property or environment and the magnitude of such disaster is beyond the coping capacity of the community of the affected area.

Related Questions

Which of the following components are true about tax planning?
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3. Reducing tax liability and increasing the ability to make contributions towards retirement plans are critical for success.
4. Tax planning comprises various considerations such as size, the timing of income, timing of purchases, and planning are concerned with other kinds of expenditures.
5. The chosen investments and the various retirement plans should go hand-in-hand with the tax filing status as well as the deductions in order to create the best possible outcome.
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What percentage of income from compensation on disaster is exempted from tax liability?
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Statement (II): If tax liability has been reduced to get benefit of deduction available under the income tax, it is called tax evasion.
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Propositions as regards the liability of the surety under the surety bond are:
1. The liability of the surety is mutually exclusive of the liability of the accused under his personal bond.
2. The liability of the surety is contingent on the liability of the accused under his personal bond the liability of the surety.
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Now which of the following is correct
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