Budget 2026 Updates: Interest on Motor Accident... ... Union Budget 2026 LIVE: Finance Minister Nirmala Sitharaman Ninth Budget Today All Updates

Budget 2026 Updates: Interest on Motor Accident Claims Made Tax-Free

In a major relief for accident victims, Finance Minister Nirmala Sitharaman has proposed that interest awarded by the Motor Accidents Claims Tribunal (MACT) to a natural person will be fully exempt from Income Tax. She also announced that no Tax Deducted at Source (TDS) will apply to such interest.

When a person is injured or loses their life in a road accident, the MACT grants compensation to the victim or their family. This compensation often includes interest for delays in payment. Until now, this interest was treated as taxable income, and TDS was deducted before the amount was paid.

Under the new proposal, any interest granted by MACT will be completely tax-free. This means victims or their families will receive the full interest amount, with no tax deductions and no TDS.

In simple terms, accident victims will no longer see their rightful compensation reduced due to taxes, offering much-needed financial relief at a time of distress.