Dear Seniors, Please reply what is 'Ex-Gratia'? How it is useful for employee and employer ? With Due Regards Tribikram
From India, Delhi
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1From India, Delhi
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Dear Tribikram,
"Ex-gratia" is Latin (lit. 'by favour') and is most often used in a legal context. When something has been done ex gratia, it has been done voluntarily, out of kindness, or grace. In law, an ex gratia payment is a payment made without the giver recognizing any liability or legal obligation.
In most cases, ex-gratia is paid along with the annual bonus. Since the Payment of Bonus Act puts a cap on a 20% bonus for employees, the employer and employee agree to pay a higher amount than 20% and coined a new term, ex-gratia, which is paid along with the bonus.
Rgds,
Suresh Ramalingam
Consultant - Compliance
From India, Mumbai
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"Ex-gratia" is Latin (lit. 'by favour') and is most often used in a legal context. When something has been done ex gratia, it has been done voluntarily, out of kindness, or grace. In law, an ex gratia payment is a payment made without the giver recognizing any liability or legal obligation.
In most cases, ex-gratia is paid along with the annual bonus. Since the Payment of Bonus Act puts a cap on a 20% bonus for employees, the employer and employee agree to pay a higher amount than 20% and coined a new term, ex-gratia, which is paid along with the bonus.
Rgds,
Suresh Ramalingam
Consultant - Compliance
From India, Mumbai
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Hi, When an employer give it as Ex-gratia i.e., on top of annual bonus, is that a taxable income or how is that treated with regard to income tax. Pls let me know, Pradeep
From India, Bangalore
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From India, Bangalore
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Dear Friends,
I fully agree with Mr. Suresh Ramalingam. However, there is additional information to consider. For industries like service industries (such as hospitals) and social work organizations, where the concept of "No profit No loss" applies, ex-gratia payments are provided to employees since they are not covered under the Payment of Bonus Act.
In the case of ex-gratia payments, there is no ceiling, and the percentage may vary from year to year, solely at the discretion of the management.
Mangai
From India, Chennai
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I fully agree with Mr. Suresh Ramalingam. However, there is additional information to consider. For industries like service industries (such as hospitals) and social work organizations, where the concept of "No profit No loss" applies, ex-gratia payments are provided to employees since they are not covered under the Payment of Bonus Act.
In the case of ex-gratia payments, there is no ceiling, and the percentage may vary from year to year, solely at the discretion of the management.
Mangai
From India, Chennai
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