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taxability of ex gratia payment on death

lump sum termination payments, including so-called “ex gratia ” or gratuity payments made to an employee in consequence of an “agreed resignation” or “mutually agreed termination”, are subject to income tax. Payments for loss of future super payments na. Payments arising from an employee's termination because of ill health , other than compensation for personal injury na. The Inland Revenue has confirmed, in a Statement of Practice published on 31st October, 1991, its views that an "arrangement" by an employer to make ex gratia payments to an employee on his retirement (or death) constitutes a "retirement benefits scheme". HMRC's view is clear - if there was a payment… A guide to the Income Tax ... payment on non-accidental death . This payment may be regarded as wages or salary or as payment for loss of a job. The tax-free amount is not part of the employee's ETP. Compensation for wrongful dismissal, as long as it is paid within 12 months of the actual termination of employment. Ex Gratia Payment By Employer To Deceased’s Dependants Deductible From MACT Compensation: SC [Read Judgment] Ashok KM. 573, F.No. It says: "an employer-financed retirement benefits scheme is created by the payment." Any tax free lump sum payments you receive are then taken from this benefit. If your contract provides for payment in lieu of notice, the payment is treated as pay and exemptions do not apply. Circular No. Share This - x. So if the payment is ex gratia to the legal heirs, certainly it was not an amount due to the deceased. 200/115/90-ITA-I, dated 21-08-1990 provided that a lump sum ex gratia payment made, to the widow or other legal heirs of an employee, who dies while still in active service, will not be taxable as income under the Income-tax Act, 1961. Employee share scheme payments. An advance or loan. It's hard to think of a more relevant example. Therefore, the normal procedure where a lump sum is to be paid to an employee on Payment in lieu of notice. Will such amount be taxable in my hands You don't need a pre-existing scheme. Ex gratia payment received by a person or his heir from the Central Government/State Government/Local Authority/Public Sector Undertaking, consequent upon injury to the person/death of a family member, while on duty, is not liable to tax - Circular : No. Payments for these types of termination are tax free up to a certain limit. 25 Sep 2016 3:33 PM GMT. The company gave me certain amount as ex-gratia compensation. You don't need documents. EIM15310 discusses the taxation of an ex gratia payment. if any of the ETP is tax-free An ETP has a tax-free component – if part of the payment is for invalidity or work done before 1 July 1983, you don't withhold tax from this component. My husband died in September 2012 while he was a director in a reputed company. 776, dated 8-6-1999. Company gave me certain amount as ex-gratia compensation 2012 while he was a director in reputed. 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