Interest received from Motor Accident Compensation Tribunal

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Interest received from a Motor Accident Compensation Tribunal (MACT) is not considered taxable income under the Income Tax Act, 1961. This ruling, applicable from AY 2022-23, clarifies that such interest is part of the compensation for damages and should be shown under 'other exempt income' in your Income Tax Return.

RAJANEESH V R

RAJANEESH V R (Querist)

15 June 2022 Sir,
Interest received from Motor Accident Compensation Tribunal is taxable ?
If Taxable, 50% deduction on compensation or Enhanced compensation is available for such interest?
How to show Such income in Income Tax Return ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 June 2022 Pardiwala and Justice Nisha M. Thakore has held that the interest awarded by the Motor Accident Claim Tribunal (MACT) under section 171 of the Motor Vehicles Act 1988 is not taxable under the Income Tax Act, 1961.

Show it in exempt income schedule.

RAJANEESH V R

RAJANEESH V R (Querist)

15 June 2022 Thank you sir..
Is it applicable for AY 2022-23 ? Or from which year it's applicable ?

RAJANEESH V R

RAJANEESH V R (Querist)

15 June 2022 One more thing sir,
How to show it under exempt income if there is no specific head ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

15 June 2022 Show it under other exempt income.

Compensation awarded under Motor Vehicles Act or Employees’ Compensation Act in lieu of death of a person or bodily injury suffered in a vehicular accident, is a damage and not an income and cannot be treated as taxable income including interest payment.
It's applicable for AY 2022-23.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

15 June 2022 The said interest forms part of compensation and which is not taxable under provisions of Section 56(2)(viii) of the Income Tax Act, 1961.

RAJANEESH V R

RAJANEESH V R (Querist)

16 June 2022 Thank you sir for valuable information

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