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+{{htmlmetatags>metatag-description=(A 2026 Supreme Court ruling sets which ITR fixes a motor accident victim income for MACT payouts - latest ITR if salaried, a three-year average if self-employed.)&metatag-keywords=(ITR motor accident compensation, MACT income calculation, salaried vs self-employed ITR, Rashmirekha Tripathy 2026 INSC 661)&metatag-robots=(index,follow)&metatag-og:title=(How ITR Decides Your Motor Accident Compensation Income)&metatag-og:description=(A 2026 Supreme Court ruling sets which ITR fixes a motor accident victim income for MACT payouts - latest ITR if salaried, a three-year average if self-employed.)&metatag-og:type=(article)}}
+====== How ITR Decides Your Motor Accident Compensation Income ======
+{{ :social:auto:motor-accident-compensation-itr-income-calculation.png?direct&1200 |How ITR Decides Your Motor Accident Compensation Income — RTI Wiki}}
+<WRAP center round info 95%>
+**Quick Reply:** A 2026 Supreme Court ruling sets which ITR fixes a motor accident victim income for MACT payouts - latest ITR if salaried, a three-year average if self-employed.
+</WRAP>
+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.
+<WRAP box>
+**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.
+</WRAP>
+===== Salaried vs self-employed: which ITR is used =====
+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.
+===== Worked example: the Odisha construction owner =====
+The lead case shows exactly how the self-employed rule works in practice.
+  * **Who:** The deceased was 39 years old and ran his own construction business.
+  * **When and where:** He died in a road accident in Odisha in May 2018.
+  * **His ITRs:** He had declared roughly **Rs 11.6 lakh** and **Rs 15.06 lakh** in the two assessment years before the accident.
+  * **What the High Court did:** The Orissa High Court simply **averaged the two returns to about Rs 13.33 lakh** a year.
+  * **What the Supreme Court did:** Looking at the **nature of his construction business**, the court declined to stop at a bare average and **fixed his annual income at Rs 14 lakh** - slightly above the average.
+  * **Result:** Compensation was **enhanced from about Rs 1.87 crore to Rs 1.97 crore**.
+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.
+===== How the ITR figure fits the wider calculation =====
+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:
+  * [[https://righttoinformation.wiki/motor-accident-compensation-multiplier-method-explained|The multiplier method explained]]
+  * [[https://righttoinformation.wiki/mact-self-employed-future-prospects-2025|Future prospects for self-employed claimants]]
+  * [[https://righttoinformation.wiki/how-to-file-mact-petition-motor-accident-compensation-india|How to file a MACT petition]]
+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.
+===== Proof-of-income documents to file =====
+To make the ITR rule work in your favour, put a clean paper trail before the Tribunal:
+  * **ITR acknowledgements (ITR-V)** for the relevant assessment years - the latest one for a salaried victim, up to the last three for a business owner.
+  * **Form 16 or Form 16A** and salary slips for a salaried claimant, to corroborate the return.
+  * **Audited accounts, profit and loss statements and GST returns** for a business, to show the nature and health of the enterprise.
+  * **Bank statements** reflecting business or salary credits.
+  * A short note explaining any dip - illness, a slow year, or start-up losses - so the Tribunal can apply the "circumstances" discretion in your favour.
+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 [[https://righttoinformation.wiki/book|The RTI Playbook]] for how to frame those requests, and the [[https://righttoinformation.wiki/tools/ai-rti-drafter|AI RTI drafter]] to draft them quickly.
+===== Frequently asked questions =====
+==== I am salaried - can the Tribunal use an average of my ITRs instead of the latest one? ====
+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.
+==== I run a business - does the court always average exactly three years? ====
+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.
+==== What if the deceased had no Income Tax Return at all? ====
+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.
+==== Does using the ITR change the multiplier or future prospects? ====
+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.
+==== Can the insurance company challenge the income shown in my ITR? ====
+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.
+===== Sources =====
+  * Verdictum report of the judgment: [[https://www.verdictum.in/supreme-court/rashmirekha-tripathy-v-the-branch-manager-legal-claims-sriram-general-insurance-company-ltd-2026-insc-661-income-computation-formula-motor-accident-compensation-1616982|Rashmirekha Tripathy v. Branch Manager, Sriram General Insurance, 2026 INSC 661]]
+  * Motor Vehicles Act, 1988, Sections 166 and 168 (compensation before the Claims Tribunal): [[https://www.indiacode.nic.in/handle/123456789/1798|indiacode.nic.in]]
+{{tag>itr compensation decides motor accident income}}