23 March 2024
As per settlement reached between bank unions and Indian Banks Association, Banks will be disbursing ex-gratia to bank pensioners. This is on monthly basis and the calculation is based on some formula which in turn depend on the retirement period and the pension that is being drawn now. The amount may vary between Rs.400 to Rs.5600.
Is it true that the said ex-gratia is not taxable? There seems to be a case (Arunbhai R Naik) decided by the Gujarat High Court on the matter wherein it was held that such ex-gratia will not be treated as profit in lieu of salary within the ambit of ‘income from salaries’.
Please also refer to a write up in the Economic Times (https://economictimes.indiatimes.com/definition/ex-gratia-payment)
05 May 2024
Ex gratia payments are often made in the following situations:
To employees who are laid off or terminated from their jobs.
To employees who are injured or killed on the job.
To the families of employees who are killed on the job.
To victims of natural disasters or other calamities.
To employees who have to relocate for work.
These payments :: a voluntary payment made by an organization, government, or other entity to an individual or group of individuals. It is not required by law and is typically made as a gesture of goodwill or to compensate for some type of loss or hardship, are tax exempt... If you were laid off by your employer, you can claim it to be tax free, but when it is paid as regular pension, it will be taxable.
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