Income tax on ex-gratia payment

Ex gratia is not taxable.

What you will get may not be defined as ex-gratia.

But the bank describes / terms this as exgratia. 

But the bank describes / terms this as exgratia. 

Under which section TDS been deducted?

The bank was requested to credit pension and exgratia separately but the request was declined. Hence there is only a combined credit every month (pension plus exgratia). So the deduction of tax is as applicable for pensison/salary ony for the entire amoiunt. 

If TDS is deducted over entire amount, you can treat the entire amount as pension only.

Pension comprises Basic Pension, Dearness Allowance and Ex-gratia. Earlier there used to be only Basic pension and DA. Ex-gratia is a new component. Though it is credited along with pension, it is distinctly described as Ex-gratia. Ex-gratia may be modified/increased/decreased in future. Even it may be fully withdrawan. 

As the banks treat the entire amount as pension, it calculates TDS on the entire amount. Not the other way around (i.e. as the TDS is deducted we have to treat it as pension). 

In all places, the amount is described as Ex-gratia only. When you term this component as Ex-gratia, how it is taxable, based on the cases cited earlier?

Thanks for your effort in clarifyng the doubt. 

Regards.s

Based on your form 16.

ITD will tax based on entire amount, unless bank rectifies it.