Delhi Red Fort Blast: Are Ex Gratia Payments To Victims Exempt From Tax? Here’s What Rules Say

In the wake of the recent tragic car explosion near Delhi's Red Fort, which resulted in multiple fatalities and injuries, the Delhi government has announced ex gratia payments to the victims and their families. Chief Minister Rekha Gupta declared a compensation of ₹10 lakh for the families of the deceased, ₹5 lakh for those permanently disabled, and ₹2 lakh for individuals with serious injuries. This announcement has raised a crucial question: Will these ex gratia payments be subject to taxation?

Ex Gratia Payments: A Capital Receipt?

Tax experts suggest that these ex gratia payments are likely to be considered capital receipts rather than revenue receipts. Generally, the Income-tax Act stipulates that only revenue receipts are taxable, while capital receipts are not, unless specifically brought under the purview of taxation.

Himank Singla, a founding partner at SBHS & Associates, stated that the ex gratia is a compassionate payment by the State Government to provide relief for loss of life in a tragic incident. It isn't a payment for services rendered or a consideration for any business or profession. Therefore, the ₹10 lakh received by each family is not taxable and does not need to be disclosed in the income tax return.

Section 10(BC) of the Income Tax Act

Tax veteran Balwant Jain noted that the ex gratia is likely tax-exempt under Section 10(BC) of the Income Tax Act, provided the Red Fort blast qualifies as a disaster under the Disaster Management Act, 2005.

Details of the Red Fort Blast

On November 10, 2025, a car exploded near the Red Fort in Delhi, resulting in at least 9 deaths and over 20 injuries. The incident occurred at approximately 6:52 pm IST near the Lal Quila metro station. Initial investigations suggest the blast may have been caused by ammonium nitrate. The Delhi Police have invoked the Unlawful Activities (Prevention) Act, and the National Investigation Agency (NIA) has taken over the investigation.

Government Response and Investigation

Following the blast, Prime Minister Narendra Modi spoke with Home Minister Amit Shah to assess the situation. Shah visited the blast site and met with the injured at LNJP Hospital, assuring a thorough investigation. The Delhi Metro Rail Corporation closed the Lal Quila Metro Station as a precautionary measure. Investigators are exploring all possible angles, with teams from the Delhi Police, NIA, NSG, and forensics involved in the probe.

Aftermath and Support

The incident has prompted heightened security measures in Delhi and surrounding areas. The Delhi government has directed hospitals to provide free medical care to all victims and is coordinating with the police to ensure prompt compensation to affected families.

Conclusion

While the final decision rests with the tax authorities, current understanding and expert opinions suggest that the ex gratia payments provided to the victims of the Delhi Red Fort blast are likely to be exempt from income tax. This exemption would offer much-needed financial relief to those affected by this tragedy, allowing them to focus on recovery and rebuilding their lives.