Surrender of Club Membership

[Ethirajan Parthasarathy]

It is a common feature for social clubs to pay compensation to members on voluntary surrender of their membership. I would like to know experts’ view whether such compensation received is subject to income tax

AI Summary

Compensation for Surrendering Social Club Membership: Income, GST at 18%, and Potential Capital Gains Tax Implications Explored. A forum participant inquired about the tax implications of compensation received from a social club for voluntarily surrendering membership. One respondent referenced an article suggesting such compensation might not be considered income for tax purposes. Another participant analyzed the situation under tax law, indicating that the compensation could be seen as a supply of service, subject to GST at 18%. They argued that the compensation is a consideration rather than true compensation and suggested it might also attract capital gains tax.