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Retrenchment Compensation – Section 10(10B)

Retrenchment compensation received by an assessee shall be exempt of the least amount from the following.

  • Actual amount received
  • 5,00,000
  • An amount calculated in accordance with section 25F(b) of the Industrial Disputes Act, 1947 i.e 15 days average pay x completed year of service or part thereof in excess of 6 months

 

4 comments

  1. Dear Sir

    I have been asked to resign immediately due to shutting down of a department in my company. The HR said they will pay 9 months severance package. But they said they cannot provide tax relief according to section 10 (10B), as they claim this is like a voluntary resignation. If they calculate that way the severance will be very less.

    So I have to pay the highest tax of 30% for the severance pay.

    My question is can I claim exemption under section 89 (1)?
    Do I need to pay the tax of 30% as the company says?

    This is financial year 2015-16. So which financial year or assessment year should I claim exemption under section 89(1) ?

    • Rohit Agarwal

      Hello Gopal,

      Section 89 do not apply on the amount received or receivable by an assessee on his voluntary retirement or termination of his service.

  2. Mohit malhotra

    Can I claim refund on it for AY 20142015?

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