Do J&J hip implant patients need to pay tax on compensation? Find out here

As the money received is capital receipt, it will be tax-free according to income tax provisions

The patients who are suffering due to faulty hip implants sold by Johnson and Johnson (J&J) can get as much as Rs 12 million in compensation, according to reports. At present, there are no specific legal provisions to provide compensation to patients in such cases. The government, therefore, had made a panel to devise a formula to compensate the patients. Will the windfall compensation that a patient receives be subject to tax?

The taxation of compensation that an individual receives can be tricky, as the Income Tax Act does not explicitly state when a compensation can be taxed and when not.