Ex gratia I received at the time of the dismissal was taxed. Can I get a refund? | Mint

I was discharged from a MNC as a resignation. The company offered £ 35 lakh as ex gratia, but taxed the total amount according to the appropriate tax page rates. Is the ex gratia taxable? If yes, why? Can I pay a refund/rebate on the tax? The taxability of the ex gratia you received from your former employer will depend on the exact nature of the payment and the circumstances under which such payment is made. It would be taxable as a salary if it is paid to you in connection with your services rendered during service or in connection with the termination of your service. Also read: How to get rich: These investment tips can keep you at Manirbhar through your entire life if the ex gratia is paid voluntarily by the employer, says the payment of any personal characteristics of the employee, such payment would not be taxable as a salary. Although various courts ruled that such voluntary payment of ex gratia without any legal obligation and not instead of services provided by the employee would be regarded as a capital receipt, and was therefore not taxable, most of these decisions were prior to the launch of Article 56 (2) (x). In my opinion, if such ex gratia is voluntarily received from a former employer, such amount is likely to be taxable if income from other sources under section 56 (2) (x), as it is received without any consideration. Also read: New US tax proposal: What it means to NRIs who send money to India If you want to demand that the amount received is not taxable, you can claim a refund from the TDS deducted by your employer in your income. You must ensure that the amount of ex gratia you received was disclosed in the return as exempt income, and that such a disclosure is also made in the TDS schedule. As discussed above, such a view is unlikely to succeed as it may be taxable as income from other sources. Also read: Is it the right time to invest in gold ETFs if gold prices fall? It is assumed that the total amount of ex gratia you receive is voluntary and is not after gratification or under any voluntary pension scheme, as the taxability is among each of these differences and can be exempt, subject to certain conditions as well as a threshold. Mahesh Nayak, Chartered Accountant, CNK & Associates. If you have a personal financing inquiry, write to us at [email protected] to answer this from experts