Ex-gratia payment

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akhil (Querist)
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27 March 2012 Please help me and let know whether the ex-gratia payment recieved by widow of the govt employee is taxable or not.
If yes, then under which section ???????
and, if not or if exempted, then under which section, it is exempted ????

CA Nagaraj Bhat

CA Nagaraj Bhat (Expert)
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29 March 2012 FAMILY PENSION PAYMENTS RECEIVED BY THE LEGAL HEIRS OF A DECEASED EMPLOYEE:

After the death of an Employee if there is any Family Pension received by the legal heirs of the deceased it will be deemed to be the Income of legal heirs and will be taxed under Income from Other Sources, subject to a Standard Deduction allowable to the extent of:-

33 1/3 % of such Pension received OR Rs. 15,000/- whichever is LESS.

However following Points are worth noticing in this respect:

Ex- Gratia payment made to the Widow or Other legal heirs of an employee, who dies while still in active service, will not be taxable as Income in India.

Lump Sum payment made gratuitously/ by way of compensation or otherwise to the Widow / Legal heir, who dies while still in active service, will not be taxable as Income in India.

Where the death of a member of the Armed forces (including Para military forces) of the Union has occurred in the course of Operational Duties, in such circumstances & subject to certain prescribed conditions, family pension received by Widow/ Legal Heirs is exempt from tax.

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