TAXABILITY OF RETRENCHMENT COMPENSATION & VRS COMPENSATION

                            TAXABILITY OF RETRENCHMENT COMPENSATION - Section 10(10B)


Meaning of Retirement compensation : Any compensation received by a workman at the time of his by retrenchment under the Industrial Disputes Act, 1947

Exemption Available: The least of the following shall be available as exemption:

               Actual retrenchment compensation received;

      Rs.5,00,000;

      Amount computed u/s 25F(b) of the Industrial Disputes Act, 1947, ie, (15/26 (x) Average salary of last 3 months (x) Number of completed years of service or part thereof in excess of 6 months) - Salary would include basic pay and dearness allowance


TAXABILITY OF VRS COMPENSATION- Section 10(10C) & Rule 2BA


Meaning of voluntary Retirement compensation : An employee may choose to retire voluntary from his job under a scheme of voluntary retirement framed by the employer or the government. Compensation received 4. ,,-; by the employee at the time of such voluntary retirement is known as voluntary retirement compensation.

 

Exemption Available: The least of the following shall be available as exemption: A

      Actual voluntary retirement compensation received;

      Rs.5,00,000

      [3 Times (x) retirement benefit salary per month at the time of retirement (x) Number of; completed years of service)

- Any port of ,month shall be completely ignored;

      Retirement benefit salary per month at the Time at retirement (x) Number of months of service yet to be completed to reach the age of retirement)


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