IT refunds: lack of awareness costs kin of accident victims dear

“Why should interest be taxed at all when families of accident victims are undergoing hardship due to loss of members?”

Lack of awareness and the procedure that needs to be adopted for getting the relief seems to come in the way of several families of road accident victims not claiming returns for income tax deductions, wherever applicable, on the interest on the compensation awarded.

Alternative scheme

Unless an alternative scheme for quick disbursal is evolved, the injured or the families of the dead, particularly those belonging to the lower middle-class, may continue to forego precious sums deducted at source, say those handling road accident compensation cases.

An electrician, aged nearly 40, died in a road accident at Maduravoyal in 2008. His wife was not employed, and she had two children.

Deduction from compensation

One of them had a brain-related problem. In 2012, the Motor Accidents Claims Tribunal awarded a compensation of Rs.13 lakh, including Rs. 4.15 lakh towards interest. Income tax was deducted on the interest.

The family had to approach the Income Tax Department for return of the sum, if it was eligible, explained V.S. Suresh, an advocate.

Similar was the case of an air-conditioner mechanic who sustained a grievous injury in a road accident in 2007 at the Ambattur Industrial Estate.

Out of the total award, nearly Rs.46,000 was deducted as tax on the interest.

“Why should the interest be taxed at all when the families of accident victims, especially the poor, who are already undergoing considerable hardship owing to the loss of members,” the advocate asked.

Certificate

To claim refund, the injured or the family of the dead should initially get the tax deduction certificate from the insurance company concerned. This consumed time.

Later, the essential requisite for seeking refund was the PAN card. The returns were usually done through auditors. Refund was made in eligible cases as per rules.

Many of the victims were not aware that they could approach the Income Tax Department for return of the tax paid.

To go through the formalities, most of the claimants expected the advocates who handled their cases before the Motor Accidents Claims Tribunals, to help them to get the refunds also. “Many families do not seek refund in view of the time-consuming procedure,” says an informed source.