TDS On MACT Awards: Supreme Court Asks Centre To Look Into Unclaimed Refunds Of Claimants Who Are Not IT Assessees

The Supreme Court on Thursday directed the Central Government to look into the issue of money deduced from motor accident compensation awards as Tax Deducted at Source (TDS) lying as unclaimed refunds with respect to claimants who may not come within the bracket of Income Tax assesses.

A bench comprising Justice Sanjay Kishan Kaul and Justice MM Sundresh was hearing the case Bajaj Allianz General Insurance Company Private Ltd. vs. Union of India in which it is considering guidelines to streamline the process of disbursement of compensation to the victims of motor vehicle accidents. In the previous order passed on November 16, 2021, the bench had dealt with the aspect of TDS in the awards passed by the Motor Accident Claims Tribunals (MACT) at two different rates - 10% and 20% - across the country.

Additional Solicitor General Jayant K. Sud informed the bench that a uniform system is being brought in place by the Centre whereby TDS will be uniformly 10% for all categories of cases.

N Vijayaraghavan, who is assisting the Court in this matter as an amicus curiae, pointed out that there are large amounts of money collected as TDS on award lying unused as the claimants are not fully aware as to how to obtain the refund. The bench noted that this situation might be arising because many claimants are coming from poor economic backgrounds, who fall outside the Income Tax slabs.

Vijayaraghavan pointed out that Justice Kaul, while dealing with a matter as the Chief Justice of the Madras High Court, had asked why the unrefunded TDS amounts could not be used for the benefit of victims. The amicus surmised that the unrefunded TDS amounts must be over Rs 600 crores.

"We must call upon the ASG to look into this aspect and work out a system where this aspect can be dealt with", the bench stated in its order.

(To be updated with the order after it is uploaded)