I have taken Voluntary early retirement offered by my company last FY. I have received an ex-gratia compensation for the same. I have heard that an exemption up to Rs.500000 is allowed for such compensation. If so where do I include this while filing the ITR. Also please let me know when the “ADD BROKER” feature will be enabled on your site.
Can you please help me with this query.
As per my opinion, ex gratia compensation is exempt from tax if employee receives ex-gratia from Central govt/state govt/ local authority/Public Sector Undertaking, otherwise it is taxable.
Further, add broker feature is already enabled on site.
Hope, it helps!
Thanks for the reply. I found 2BA which also says “any other companies”. Can you please check and let me know.
Thanks & Regards
@Kaushal_Soni, anything on this?
The term ex-gratia defines the payment received by favour or gift voluntarily without having any obligation or legality involved from the employer side and hence, compensation by this nature may be taxable.
But, If any amount received or receivable by an employee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or scheme of voluntary separation, to the extent such amount does not exceed five lakh rupees, shall be exempt from tax.
Further, such compensation has to be paid in purview of company’s voluntary retirement policies or obligatory by the employers and according to rule 2BA of income tax rules.
I hope, it helps!