Understanding Ex Gratia: Is It Deductible from Salary and Tax-Exempt?

saji

Please clarify what Ex gratia is. Is this a deductible amount from your salary component, and is there any exemption in income tax on the amount paid as ex gratia?

It's urgent as I am confused.

Thanks,
Saji

Amitmhrm

Hi Saji,

Ex-gratia is an amount that is added as a pre-defined bonus. It is a part of CTC and is paid on a pro-rata basis at the time of Diwali or in case of separation as well.

Regards,
Amit Seth.

saji

Thank you for your reply.

But my question was:

1. Is this a deductible amount from the salary and then paid to the employee?
2. Is the amount received as ex gratia tax-exempted or not?

Saji

Amitmhrm

Hi Saji,

It's a part of your salary, but it's been added as a component of CTC while preparing the salary structure. Yes, it is taxable, as already defined by Mr. Ram.

Thank you.

S. Krishnamoorthy

Hi,

"Ex gratia" literally means any amount paid as a 'favor'. It may be a bonus for achieving targets or excellence in work. It becomes part of the gross salary of an employee.

S. Krishnamoorthy

Srinivas Neeragantapalli

Hi,

As a practice, ex-gratia is paid once a year. This is a lump-sum amount payable annually and attracts taxes as applicable.

Srinivas

vnsolanki07@gmail.com

Hi all,

I need to know, is Bonus and Ex Gratia both used in the Salary Breakup at the same time? Also, how can I explain Ex Gratia to employees? Please help me.

Thanks & Regards,
Vipul Solanki

If you are knowledgeable about any fact, resource or experience related to this topic - please add your views. For articles and copyrighted material please only cite the original source link. Each contribution will make this page a resource useful for everyone. Join To Contribute