Interest on compensation /Enhanced compensation

 Compensation-Taxable Under Income from Capital Gains

Interest on Compensation- Taxable Under Income from Other Sources(50% deduction also)

• Compensation received is covered under income from capital gains.
• However sometimes this compensation is received late on which interest is received
• Sometimes compensation is Enhanced on court order on which interest is also received
• The interest on compensation or enhanced compensation is covered under Income from other sources.
• 50% Deduction is available on this income under section 57.

EXAM QUESTION

Interest on enhanced compensation received by Mr.G during the previous year 2015-16 is Rs 5,00,000.

Out of this interest,

Rs 1,50,000 relates to the previous year 2011-12,

Rs 1,65,000 relates to previous year 2012-13 and

Rs 1,85,000 relates to previous year 2013-14.

Discuss the tax implication, if any, of such interest income for A.Y.2016-17.