TaxTMI 
TaxTMI 
TaxTMI 
Seeking Clarification on Tax Implications for Ex-Gratia Payment Received After layoff
X X X X Extracts X X X X
X X X X Extracts X X X X
....eeking Clarification on Tax Implications for Ex-Gratia Payment Received After layoff<br> Query (Issue) Started By: - Karan Dated:- 10-7-2025 Last Reply Date:- 29-8-2025 Income Tax<br>Got 4 Replies<br>Income Tax<br>Hi, I was laid off from my job and was paid 4 months salary as ex gratia subsection under the salary section in my Form 16. I was a manager in my last role and the ex-gratia amount is 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 lacs and was taxed by this employer in its entirety(not 12.5 lacs u/s 10b or 10c). This is adding substantial tax this AY, esp in year that's been so turbulent. Can someone please help if there's any deduction allowed? I see conflicting reads on the internet about ex-gratia taxability, with some saying its not taxable at all and some saying everything is taxable. Reply By YAGAY andSUN: The Repl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y: Your summary is accurate and aligned with the settled legal position. To reiterate concisely: Ex-gratia on termination is fully taxable under Section 17(3) unless it qualifies under Section 10(10B) (retrenchment) or Section 10(10C) (VRS), both of which have strict applicability conditions. Since you were a managerial employee and the payout wasnt under a notified VRS, neither exemption applie....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, making the ?17 lakh fully taxable. The only practical relief available is under Section 89(1) for income received in advance or in lump sum, which helps spread the tax impact over previous years. To claim it, Form 10E must be filed before filing your ITR. This is the best available course of action in your case to mitigate the tax impact. Reply By Harshaditya Kabra: The Reply: Unfortunately,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... your ex-gratia payment of Rs. 17 lakhs is fully taxable as salary income under Section 17(3) of the Income Tax Act, 1961. This is because ex-gratia payments made by employers to employees in connection with termination of employment are treated as "profits in lieu of salary" and are subject to regular income tax rates Reply By Karan: The Reply: My ex-employer hasn't given relief u....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Section 89(1) in Form 16. How much relief can I get under this section? Can this be brought under the purview of 10(B) in any way? Reply By Guruprasad: The Reply: I'm in a similar situation, though my designation is not that of a manager and currently unemployed. Based on a few tribunal verdicts reviewed, the rulings were in favor of the employee, indicating that ex-gratia payments m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ay qualify as exempt. Can this be claimed and later challenged if questioned by the Authorities. Please advise. <br> Discussion Forum - Knowledge Sharing ....