Ex Gratia in lieu of salary

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A client received a substantial ex gratia payment from a government school, leading to questions about Income Tax Return (ITR) filing and Tax Deducted at Source (TDS). The discussion clarifies that while the initial Rs. 3 lakh might fall under ITR-3 or ITR-4 with a 1% TDS rate, the entire amount, including the remaining Rs. 9 lakh, needs careful verification. It's crucial to check the TDS certificate and determine if the payment can be declared under 'income from other sources' or potentially 'salary' for ITR-1, with advice to thoroughly verify all details.

Surender jangra

Surender jangra (Querist)

13 July 2025 Dear All
One of my client received ex gratia payment from govt school on regular monthly basis and the amount was 12 Lakh. Employer deducted TDS u/s 194C on INR 3 Lakh i.e.90000.

what form of ITR and where it will be show? can we show under income from other sources all amount?
please advice.
can we show income under salary to file under ITR-1?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

13 July 2025 Check TDS certificate for the remaining amount of Rs. 9 lakhs. Whether it is actually extra gratia declared in form 16. The contractual income of 3 lakhs should be declared under ITR 3 or ITR 4. But the TDS rate should be at 1% not 30%. Needs to verify details thoroughly.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

26 September 2025 Good luck...

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