Exgratia is axable on receipt or accrual

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 November 2015 Dear All,

My company is deducting Certain amount from my salary as exgratia which is pay at diwali occassion in next year. Please tell me whether this amount is taxable on actual receipt basis or on accrual basis.

Thanks in Advance

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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05 November 2015 As per section 17 of Income Tax Act 1961, salary will be taxable on

Due basis
or Advance

Whichever is earliest.

Therefore, in your case ex-gratia will be taxable on due basis i.e. when salary become due.

Thank You...