Veteran filmmaker Subhash Ghai presented the fifth Hridaynath Mangeshkar Award to Rahman on the 78th birthday of Pandit Hridaynath Mangeshkar, well-known composer and the younger brother of Lata Mangeshkar and Asha Bhosle.
"The music of Hridaynath-ji is an inspiration," Rahman said, adding that the Mangeshkar family has been upholding a great musical traditions across generations.
Ghai, who has worked with the 48-year old musician in "Taal", said more than being a celebrity, Rahman is a beautiful soul.
"He didn't know Hindi or Punjabi but worked 70 nights on the music of "Taal" and proved he is the best musician. He is not only a big celebrity, he is a beautiful soul," Ghai said.
Hridaynath Mangeshkar said Rahman had made the country proud with his outstanding contribution to music.
Grammy Award winning Hindustani classical musician Vishwa Mohan Bhatt and 2014 Grammy winner Ricky Kej were also present at the event.
The first Hridaynath Award was given to Lata Mangeshkar.
Asha Bhosle, Amitabh Bachchan and veteran actress Sulochana have also received this award in the past.
Rahman won the Oscar for Best Original Score and Best Original Song, sharing it with lyricist Gulzar, for Danny Boyle's "Slumdog Millionaire" in 2009.
The composer has also won four National Awards in a career spanning over two decades. He has recently composed for Ranbir Kapoor-Deepika Padukone starrer romantic-comedy "Tamasha", directed by Imtiaz Ali.