Income tax must be deducted after adding future prospects when calculating motor accident compensation.

The Claims Tribunal awarded ₹48,98,072 for the death of 25-year-old Arpit Das in a road accident on 21 September 2023.

The insurer appealed, disputing the use of gross rather than net salary, alleging delayed reporting and false implication of the vehicle, and seeking deduction of income tax.

The deceased’s mother and sister filed a cross-objection seeking enhancement, including a higher addition for future prospects and increased compensation under other heads.

The Court condoned the 21-day delay in filing the cross-objection and admitted it.

Section 173 of the Motor Vehicles Act, 1988 provides for an appeal against an award of a Claims Tribunal.

Under National Insurance Co. Ltd. v. Pranay Sethi, future prospects are added in accordance with the deceased’s age and employment status; the Court applied a 40% addition for a salaried but non-permanent employee under 40.

The Court also relied on Sarla Verma for the multiplier and deduction toward personal expenses, and Magma General Insurance Co. Ltd. v. Nanu Ram in calculating conventional heads.

The Court deducted income tax from the income inclusive of future prospects, applying the stated FY 2023–24 tax slabs.

The Court accepted the gross monthly salary of ₹31,667, supported by the witness’s evidence and salary records, and rejected the insurer’s reliance on the net amount.

It found that the FIR followed a police marg inquiry conducted on the date of death, and that the charge sheet named the offending vehicle; no contrary evidence had been produced, so the delay did not discredit the claim.

For computation, the Court applied 40% future prospects because the deceased was on probation and not a permanent employee, then deducted income tax from the resulting annual income.

Applying a one-half deduction for personal expenses, a multiplier of 18, and ₹1,32,000 under conventional heads, it calculated compensation at ₹47,43,132.

It dismissed the claimants’ cross-objection, finding no basis to increase future prospects or other heads, and left the remaining conditions of the award intact.