Ex - gratia

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Gnanashekar.R (Querist)
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28 October 2009 Hi,

Can i know aboout ex - gratia payment and what is the tax treatment for the company and employee?

and what is the salary limit for ex-gratia payment?
what is the allowed limit of exgratia to company?

Regards

Gnanashekar.R

ANIL JANGID

ANIL JANGID (Expert)
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28 October 2009 The term â€˜ex-gratiaâ€™ should only be used in relation to a payment the employer makes when under no legal or contractual obligation to do so.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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28 October 2009 Ex gratia is taxable in the hands of employee as Salary Income.

It may or may not be allowed as business expenses,depending on the circumstances and necessity of such payment.

http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/%5B2001%5D117Taxman0396(Gau).htm

http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2009ITAct/%5B2004%5D138Taxman0143(Bom).htm

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