Ans. For the relief of government employees and their families, the Govt has set up the Benevolent Fund. The purposes of the Benevolent Fund are as under:
i) giving financial assistance to the families of deceased government servants
ii) giving financial assistance to government servants who are disabled and have to quit service because of the disability
iii) making special grants to government servants in exceptional cases
Any grant paid from Govt Benevolent Fund to an employee or members of his family is fully exempt if it is paid in accordance with the provisions of Central Employee Benevolent Fund and Group Insurance Act, 1969.
Any grant recieved from a benevolent fund formed by a private sector employer for benefit of his/its employees or their family is fully taxable.
(Note: However, benevolent funds don't exist in private sector.)
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