Ex-gratia payment made voluntarily by an employer is not taxable as ‘profits in lieu of salary _____ 24 December 2015 Background Section 17(3) of the Income-tax Act, 1961 (the Act) brings certain payments such as profits in lieu of salary within the ambit of ‘income from salaries’. What about an employee who is being paid ex gratia as his salary is beyond 10,000/- 1) Can he claim ex-gratia when he leaves the firm after working for more than 30 days in a financial period. 19th July 2014 From India, Bharuch But when it is disbursed, a pay slip is provided similar to the salary slip only mentioning the ex-gratia given. For Ex-gratia, the rejection of the Committee’s formula and a continuation of the status quo mean that qualified Article 71 office holders will take home 4-month salary for each of the years that they have been in office. Outplacement Support. ? The type of outplacement support may vary from one company to another. Anything above INR 10 lakhs, the amount is known is ex-gratia, which is a voluntary contribution and not compulsorily imposed by any law. In case the compensation is received against actual services rendered by you under a contract, then the income would be taxable as income from salary in your hands What is Gratuity in Salary? Such payments include compensation due or According to him, payment of gratuity and ex gratia to MPs are legitimate and lawful since they also come under Article 71 holders, adding that MPs are required to be paid such salary and allowances and provided with such facilities as may be determined in accordance with the constitution. Honorable Haruna Iddrisu, minority leader has given reasons why MPs deserve to be paid monthly salary of Ghc 21,000 and ex-gratia of Ghc 600,000. This means an MP will take home about GHC270, 992. In discrimination cases, there is an element of compensation for injury to feelings and in serious cases there may also be damages for psychiatric damage for personal injury. This has been continued even this year, but I had resigned before the ex-gratia … Under financial legislation effective from 2018, the government devised a new kind of tax exclusion called the “Disability Exemption.” When the company is paying ex-gratia, it is not mentioned in the salary slip, since it is not given with the salary. Employer NICs will now be payable on ex-gratia termination payments above £30,000 to bring closer in line the different rules for income tax and employer NICs. 2) Will be paid ex-gratia as per his last drawn salary? Discrimination compensation and ex gratia payments. Even the ex-gratia payment made by the assessee over and above the remuneration due to the employees partakes the character of profits in lieu of salary to such employee and is duly allowable as an expenditure in the hands of the assessee under section 37(1) of the Income Tax Act” 3. However, other payments such as salary in-lieu of notice, ex-gratia and gratuity for past services are not payments for loss of office. The entirety of the termination payment will remain exempt from employee NICs, and the first £30,000 of any such payment will also remain free from deductions for income tax. Ex-gratia payments are an exception to that rule and fall under a tax exemption from s.403 Income Tax (Earnings and Pensions) Act 2003 for any amounts under £30,000.00. They are payments for services and are therefore taxable.