Big relief for motor accident victims, Know the tax rule
Tax Relief for Motor Accident Victims: Interest Amount Fully Exempt: Victims of motor accidents and their families not only endure physical and emotional trauma but also face a lengthy legal process and financial difficulties. The Motor Vehicles Act, 1988, provides for compensation in cases of death, permanent disability, or bodily injury. However, compensation is often delayed because Motor Accident Claims Tribunals (MACTs) take a considerable amount of time to deliver their judgments.
In many cases, the final settlement of a claim at the MACT can take several years. Delays in procedure, adjournments of hearings, examination of medical evidence, and appeals by insurance companies contribute to this delay. During this prolonged period, the victim and their legal heirs often struggle to cover medical expenses and meet their daily living costs. In such circumstances, the compensation and the interest awarded on it become a vital lifeline for the family’s income.
What proposals were presented in Budget 2026? Taking into account the difficulties faced by accident victims and their families, Budget 2026 proposes a major reform.
The budget proposal includes an amendment to the relevant schedule of the Motor Vehicles Act, 1988, to provide complete tax exemption on the interest amount of compensation received by accident victims or their legal heirs. Furthermore, no TDS (Tax Deducted at Source) will be deducted on this interest, regardless of the amount.
