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)
S Kalyanasundaram
CAclubindia
