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TDS ON EX-GRATIA & GRATUITY

One of our employees died in December, 2014, but he was in coma for 18 months i.e. he was not attending office, though his name was on wage - role. After his death, company will pay a lump - sum amount of Rs. 29 Lakhs as Ex-gratia and Rs. 12.5 Lakhs as Gratuity to his wife.

IS THIS EX-GRATIA TAXABLE AND TDS SHOULD BE DEDUCTED?

Dear Renu,

Please find below our reply on your question.

1) Gratuity payable to deceased 's wife of Rs.12.5 Lakh is taxable in her own hands under the head "Income from Other sources" and exemption u/s 10(10) is available to her upto Rs.10 Lakh. Therefore balance of Rs.2.5 Lakh shall be taxable in her hands.

2) Salary of 29 Lakhs for the period of 18 months is taxable in the hands of husband only, however return shall be filed by wife in the capacity of legal heir. This would be taxable under the head "Income from Salary".  No exemption is available for this amount, therefore 100% shall be taxable.

To be summarised - Two separate returns shall be filed. One for Gratuity by wife in individual capacity and second for exgratia by wife as in the capacity of legal heir.

If you have any question, Pl post the same.

Kind Regards
TaxReply.com
 

Any gratuity received under the Payment of Gratuity Act, 1972 is exempted to the extent it does not exceed an amount calculated in accordance with the provisions of sub-sections (2) and (3) of section 4 of that Act 

Any other gratuity received by an employee on his retirement or  on termination of his employment, or any gratuity received by his widow, children or dependants on his death, to the extent it does not, in either case, exceed one-half month's salary for each year of completed service, calculated on the basis of the average salary for the ten months immediately preceding the month in which any such event occurs, subject to such limit as the Central Government may is exempted

In your case the assessee has to pay tax under the head Income from Salary on lump sum amount

 

BUT WHAT WILL BE THE STATUS OF TDS DEDUCTION BY EMPLOYER. 

EMPLOYER COMPANY HAS TO DEDUCT TDS OR NOT. WHETHER THIS EMPLOYEE WILL BE TREATED AS IN ACTIVE SERVICE OR NOT. AS HE WAS IN COMA BUT HE WAS ALSO ON COMPANY,S WAGE ROLL.

Dear Renu,

Yes, TDS shall be deducted from the payments on taxable portion. And he will be treated as active since he was on payroll.

If you have any question, Pl post the same.

Kind Regards
TaxReply.com

Good

Sir,

      Whether Cicular No. 573  ( Taxability of lump sum payment made gratuitously or by way of compensation or otherwise to widow/other legal heirs of an employee) is applicable in this case or not.

As per above mentioned circular, if employee dies while in active service, then whole payment made to widow of employee is exempt.

 But in our case, we are not clear about whether employee will be treated as in active service or not as  per INCOME TAX ACT, 1961, because he was in coma since last 18 months i.e. neither mentally nor physically able to come office. but his name was in employee list for 18 months till his death.

Sir, Please let us know whether this circular is applicable  or not. 

If there is any case law on this case, please let me know.

 

Dear Renu,

you can claim the benefit as the same has been clarified by CBDT that benefits is available to person who dies in active service. In the case given by you employee was on the payroll of the employer and was only absent from services due to undergoing medical treatment in Hospital. This should be treated as employee in active service. I have reproduced the clarification issued by CBDT for your  reference:-

 

1. Clarifications have been sought from the Central Board of Direct Taxes whether a lump sum payment made gratuitously or by way of compensation or otherwise, to the widow or other legal heirs of an employee, who dies while still in active service, is taxable as income under the Income-tax Act, 1961.

2. The issue has been examined by the Board and it is clarified that any such lump sum payment will not be taxable as income under the aforesaid Act.

Circular : No. 573, dated 21-8-1990.

 

I hope you will find the above helpful to you.

Sir, thanks for reply. Can you please send any case law on this coma case in which this circular has been referred.

Hi, section 56(2)(v),(vi),(vii) and section 2(24) has been amended from AY 2005-2006. These amendment include such type of payments to be taxable. However circular also not withdrawn. Whether these payments still not taxable.

But in section 56(2)(vii) provides an exemption to any sum of money or any property received from any trust or institution registered under section 12AA (clause (g) of proviso to section 56(2)(vii)

 

Regards,

Sir

One of our employee has passed away due to heart attack. He was in rolls of the employment when he died. The company has paid all his final settlement including gratuity and leave encashment by deducting appropriate taxes. Now company proposes to pay an exgratia of Rs. 15 lakhs. This is a lumpsum amount does not have any basis. Considering his service, management has decided to make this payment. 

Do company need to deduct any tax? Can company consider this as payment under circular 594 21st Aug 1990.

 

Regards

K.Balaji

Sir

One of our employee has passed away due to heart attack. He was in rolls of the employment when he died. The company has paid all his final settlement including gratuity and leave encashment by deducting appropriate taxes. Now company proposes to pay an exgratia of Rs. 15 lakhs. This is a lumpsum amount does not have any basis. Considering his service, management has decided to make this payment. 

Do company need to deduct any tax? Can company consider this as payment under circular 594 21st Aug 1990.

 

Regards

K.Balaji

I received amount of pension on my father's death from govt school as family assistance. But the AMT of pension received by me in my bank account after deduction of tds sometime but sometime it will be collected from me in shape of tax . but when I checked my 26 As certificate on site there will be no details regarding this deduction. So please make me aware regarding this loophole by school department (which is kept by them in misc accounti.e is said by them on asking query by me ) Is this family assistance is taxable make me aware.

Dear Sir/Madam,

my company gives lumsum amount as a retainsion exgratia for the period 16-17 to 21-22 after deducting TDS amount on it; the company was shut down in 2004 but still deposited some fix amount in my bank account every month but last year decided to stop this by giving me lumsum amount with mutual understanding.

so how i can show these transaction for fling IT return for 16-17 (bifecuate received amount in years)

is it possible me to show HRA as im staying in rented house

 

please give me solution

Monthly financially assistant ex grataia is taxable or not Please give me right answer

I want to know whether recovery of debt can be made from ex gratia payment paid by the employer to the legal heir/nominee of the deceased by the courts

Please advise where to lodge complaint if Builder do not deliver the residential plot inspite of 7 years and no development has been made and no approvals taken yet

Please advise where to lodge complaint if Builder do not deliver the residential plot inspite of 7 years and no development has been made and no approvals taken yet

One of our employee has passed. Govt. Of Haryana pay his wife full salary as xgratia. Is this amount is taxable. Please solve my problem.

One of our employee has passed. Govt. Of Haryana pay his wife full salary as xgratia. Is this amount is taxable. Please solve my problem.

One of our employee has passed. Govt. Of Haryana pay his wife full salary as xgratia. Is this amount is taxable. Please solve my problem.

One of our employee has passed. Govt. Of Haryana pay his wife full salary as xgratia. Is this amount is taxable. Please solve my problem.

One company taken over the business of another company and employees are transfer in new co.with their date of joining and services with effect from the original date of joining for their service to calculate gratuity.
Old company pay Ex-grasia to his employees, can this ex-grasia taxable and if taxable what is the rate of tax ?

Dear Sir
Our one emplyee was expired in 2016. Now his widow is getting last drawn salary monthly as per govt. Rules
I want to know whether this amount is taxable or not.

Dear Sir
Our one employee was expired in 2016. Now his widow is getting last drawn salary monthly as per govt. Rules
I want to know whether this amount is taxable or not.

Dear Sir
Our one employee was expired in 2016. Now his widow is getting last drawn salary monthly as per govt. Rules
I want to know whether this amount is taxable or not.

I am an executive of BSNL.As u are

aware BSNL will give exgratia,now question is is the amount taxable or exempted?If taxable,is there any exemption limit.

Sir,
I am working employee of BSNL. Now Bsnl is offering Voluntary retirement scheme to employees with condition that exgratia amount will be paid in installments in 2 financial years.
Say Rs.15 lakhs each installment.
What is my income tax exemption
How to claim income tax exemption.
Please clarify

is there any tax deduction on ex gratia pay

I RETIRED FROM BSNL AT THE AGE OF 52YEARS ON 31-01-2020 UNDER VRS-2019 SCHEME.GETTING EX-GRATIA.IWANT TO KNOW ISEXGRATIA AMOUNT EXEMPTED FROM TAX FOR VRS OPTEE.

If exgratia is paid by company in two financial years i.e 2019-20 and 2020-21 , income tax rebate on first five lakh will be given in both financial years

Sir I am retired under vrs in January 2020 the ex-gratia amount received in two financial year rebate in both years amounting rs five +5 lakhs =10lakhs in two. Years

One employee in education department Haryana died. His wife is being paid monthly salary regularly as ex-gratia. Is this taxable ? Please explain.

Sir, I have received Gratuity and additional consideration as ex-gratia for the meritorial & beneficial service rendered by me during the tenure of employment. Is this ex-gratia amount taxable under income tax?

Sir, I have received Gratuity and additional consideration as ex-gratia for the meritorial & beneficial service rendered by me during the tenure of employment. Is this ex-gratia amount taxable under income tax?

Sir, I have received Gratuity and additional consideration as ex-gratia for the meritorial & beneficial service rendered by me during the tenure of employment. Is this ex-gratia amount taxable under income tax?

Sir, I have received Gratuity and additional consideration as ex-gratia for the meritorial & beneficial service rendered by me during the tenure of employment. Is this ex-gratia amount taxable under income tax?

One employee in education department Haryana died. His wife is being paid last drawn monthly salary regularly as ex-gratia. Is this taxable ? Please explain.

One employee in education department Haryana died. His wife is being paid last drawn monthly salary regularly as ex-gratia. Is this taxable ? Please explain.

One employee in education department Haryana died. His wife is being paid last drawn monthly salary regularly as ex-gratia. Is this taxable ? Please explain.

One employee in education department Haryana died. His wife is being paid last drawn monthly salary regularly as ex-gratia. Is this taxable ? Please explain.

One employee in education department Haryana died. His wife is being paid last drawn monthly salary regularly as ex-gratia. Is this taxable ? Please explain.

Respected sir,
My father got expired in may 2016. At that time he was in Haryana state government services. Now my mother is taking pension from June 2019 under ex gratia.
Is it taxable or not. Under which rule in ITR it will be exempted. Please reply .

Thanks.

I resigned from service on a particular date and the employer issued me immediately the acceptance letter relieving me from a subsequent date. Later after discussion the employer issued a letter declaring what all will be paid to me on my relieving in which they agreed to pay Additionally a Special Pay based on the length of my service with them. This additional SP is not a part of my Appointment Letter. Will this additional SP will be treated as Salary for Income Tax purposess or is that a Gratuitous Payment as there is no Employer Empoyee relationship.

Sir,
I retired in 2011, getting pension every month. Bank in recent wage settlement decided to pay exgratia amount (fixed amount) every month to retirees. Is this exgratia amount received by pensioner is taxable or tax exempted .

We have relieved our employees on March 15, 2024. However, we will provide them with a four-month salary as ex-gratia, which we will pay over the next four months (April 2024, May 2024, June 2024, and July 2024). We will accrue their salary in the financial year 2023-24 and release it in the agreed-upon months.

I would like to clarify when the TDS liability will be applicable: at the time of accrual or at the time of payment

I have worked in a company two years 3 months and now take over another company. On retrenchment /termination of service and paid as a compensation the following :
Notice pay...
Ex gratia.....
Surveillance
Leave encashment

Pl suggest tax exemption on it

Sudeep

19
Apr

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