India to exempt MACT compensation interest from tax starting April 2026.

Starting April 1, 2026, interest awarded to individuals by Motor Accident Claims Tribunals (MACT) in India will be fully exempt from income tax and free from Tax Deducted at Source (TDS), ensuring victims and their families receive full compensation for death, disability, or injury without tax deductions. The change, effective from the 2026-27 financial year, aims to provide immediate financial relief, especially for those facing long delays in claims, and removes the burden of tax refunds or compliance. The amendment modifies Sections 11 and 56 of the Income Tax Act, 2025, treating such awards as non-taxable compensation rather than income.