EX-GRATIA PAYMENT RECEIED FROM EMPLOYER FOR SAPERATION AGREMENT (FOR LEAVING A JOB)
This query is : Resolved
11 June 2024
My client received EX-GRATIA PAYMENT FROM EMPLOYER as part of Separation Agreement of RS.38,00,000 for discontinuing/termination of employment. He can join any other job after separation. In from 16 Employer deducted Tax on all salary including ex-gration payment. In salary Slip for that month its shown as "Ex-gratia" without mentioning whether its exempt or not. As I googled about ex-gratia taxability, its showing as exempt from tax but I was not able to find specific tax provision & section for this. But as in 26-AS salary is shown in full hence as per my analysis Its very probable that ITR may be scrutinized by IT Department. Shall I take this as exempt in a salary & if yes then under which section.
11 June 2024
No, it is taxable, unless you can prove that the compensation given was voluntary and not to be treated as 'profit in lieu of salary.'
31 August 2024
Good luck.
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