When a Motor Accidents Claims Tribunal (MACT) works out compensation for death or injury, the single biggest number is the victim's annual income. If Income Tax Returns are on record, the Tribunal now has a clear rule for which ITR to trust, thanks to a Supreme Court judgment delivered on 1 July 2026.
Direct answer. In Rashmirekha Tripathy v. Branch Manager, Sriram General Insurance (2026 INSC 661), the Supreme Court held that for a salaried victim the Tribunal should use the latest ITR - the return of the assessment year immediately before the accident - because it best captures current earning capacity, including a recent promotion. For a self-employed victim or business owner, the court said to take the average of up to the last three years' ITRs, adjusted for the nature and circumstances of the business. The award still runs through the usual multiplier method; the ITR only fixes the starting income figure.
The judgment draws a deliberate line between the two kinds of earners, because their income behaves differently over time.
| Question | Salaried victim | Self-employed / business owner |
|---|---|---|
| Which ITR? | The latest ITR (assessment year just before the accident) | Average of up to three preceding years' ITRs |
| Why? | A salary usually only rises; the newest return already reflects promotions and increments | Business income swings year to year, so an average smooths out an unusually good or bad year |
| Is it mechanical? | Largely yes - take the latest declared income | No - the Tribunal may adjust for the nature, growth and future potential of the business |
The self-employed rule is not a rigid three-year formula. The court used the words “up to” three years and said the figure stays “subject to case circumstances,” leaving the Tribunal room to move above or below a plain average where the business justifies it.
The lead case shows exactly how the self-employed rule works in practice.
The point is that the average is a starting reference, not a ceiling. Because the business showed strength, the court read the ITRs generously rather than mechanically.
The ITR only settles step one - the annual income. From there the tribunal applies the settled compensation formula: it adds a percentage for future prospects, deducts a share for the victim's personal expenses, and multiplies by an age-based figure called the multiplier, then adds conventional heads such as loss of consortium and funeral expenses.
Those later steps are the same whether or not an ITR exists, so this page does not repeat them. If you want the mechanics, read:
Where no ITR is available at all, tribunals fall back on notional income or minimum wage evidence - but if returns exist, this ruling makes them the primary proof of income.
To make the ITR rule work in your favour, put a clean paper trail before the Tribunal:
You can get certified copies of your filed returns and 26AS from the income-tax portal, and you can use RTI to obtain accident and post-mortem records from the police or hospital. See The RTI Playbook for how to frame those requests, and the AI RTI drafter to draft them quickly.
Under this 2026 ruling the latest ITR is the correct reference for a salaried victim, because it already reflects the most recent salary and any promotion. Averaging older, lower returns would understate current earning capacity.
No. The court said “up to” three years and made the figure subject to the circumstances of the business. In the lead case the judges actually fixed income above the two-year average because the construction business justified it. Fewer than three years of returns can also be used.
Then the ITR rule does not apply and the Tribunal estimates income from other evidence - wage records, the nature of the work, or notional minimum income. An ITR simply gives the strongest, hardest-to-dispute proof when it exists.
No. The ITR only fixes the annual income at the start. The multiplier, future-prospects percentage and personal-expense deduction are applied afterwards in the usual way, as explained in the linked guides above.
It can dispute how the figure is read, but a filed and accepted ITR is strong evidence. Backing it with Form 16, audited accounts or bank statements makes it far harder to contest.