Ex Gratia Payment

Tax Glossary Definition

Ex Gratia Payment

An ex gratia payment refers to a voluntary monetary payment made by an individual, organization, or government out of goodwill or compassion, rather than as a result of any legal obligation or enforceable right. Such payments are typically extended as a gesture of relief, support, or moral responsibility in exceptional or unforeseen circumstances, where the recipient has no formal entitlement.

Example: A company may provide an ex gratia payment to employees affected by an industrial accident as a goodwill gesture, even though it is not legally required to do so.

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