*Is the ₹1 Crore Compensation Taxable?* This is the question on everyone’s mind. The answer is clear: *No, the ₹1 crore compensation is not taxable in the hands of the recipients.* *Why Is It Not Taxable?* *Nature of Compensation:* Compensation for loss of life in an air crash is a capital receipt, not an income receipt. According to Indian tax law and judicial precedents, such ex gratia payments are not considered income and are, therefore, not taxable under the Income Tax Act. *No TDS Deduction:* Since the compensation is not taxable, there is no requirement for Tata Group or Air India to deduct Tax Deducted at Source (TDS) from the payout. Families should receive the entire announced amount, without any deduction. *Interest Component Exception:* If there is a delay in payment and the families receive interest on the compensation amount, only the interest portion may be subject to tax as income. The principal compensation itself remains tax-free. Consistent Practice: This treatment is consistent with past aviation tragedies and other disaster compensations in India, where ex gratia payments for loss of life have not been taxed