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Income tax

Budget 2026: MACT Interest Exempt from Income Tax

Budget 2026 exempts interest on motor accident compensation awarded by MACT from income tax and TDS, ensuring full relief to accident victims from AY 2026–27.

Motor Accident Compensation Interest Tax Exemption

Budget 2026: Interest on Motor Accident Compensation Exempt

Union Budget 2026 has provided major relief to motor accident victims by exempting interest awarded on accident compensation from income tax, effective from April 1, 2026.

What Has Changed

Interest awarded by the Motor Accident Claims Tribunal to individual claimants will no longer be treated as taxable income, and no TDS will apply.

Key Highlights

  • Complete income tax exemption on MACT interest
  • No TDS deduction at source
  • Applicable from Tax Year 2026–27
  • Applicable only to individual claimants

Impact on Victims

The exemption ensures that compensation awarded by courts delivers full financial relief without being reduced by tax deductions.
Motor accident compensation is compensatory in nature. Taxing the interest diluted the intent of providing financial justice to victims and their families.
This Budget 2026 amendment makes accident compensation more meaningful, humane, and aligned with the true purpose of social justice.
Last updated: 3 months ago
Author

Krishna Gopal Varshney

Founder & CEO - Myitronline Global Services Pvt. Ltd.

Providing expert tax filing and business services across India with over 25 years of experience in financial consulting and compliance management.

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