Supreme Court Sets New ITR Norms for Accident Victim Compensation

The Supreme Court has established standardized guidelines for computing the annual income of motor accident victims when determining compensation. The Court held that for salaried individuals, the last filed Income Tax Return (ITR) is sufficient to assess income. For self-employed individuals, the bench mandated taking the average of up to three ITRs preceding the accident to ensure a more accurate representation of earnings and prevent artificial inflation or deflation of claims.

This intervention seeks to harmonize the fragmented approaches previously adopted by motor accident tribunals across India. Historically, lower courts have lacked a uniform yardstick, leading to prolonged litigation and inconsistent compensation awards. The Supreme Court emphasized that arbitrary income assessment methods often fail to reflect the economic reality of the victim, leading to judicial inefficiency and delayed justice for accident victims and their families.

These guidelines will apply to all pending and future motor accident claims across the country, providing a predictable framework for insurance companies and claimants alike. By curbing the reliance on subjective or erratic income proof, the ruling aims to streamline the claims process and reduce the burden on the judicial system. The decision signals a move toward data-backed adjudication in civil disputes, reinforcing the necessity for transparent income documentation in Indian legal proceedings.