Tax laws on severance payment in india

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Querist : Anonymous

Querist : Anonymous (Querist)

05 December 2012 Is severance payment taxable just as salary for an individual or is there any specific exemption provided by law for this payment. I read that VRS payments are exempt to INR 5 lacs. Is that applicable for Severance as well and to all employees or are there any specific conditions that have to be met to get this exemption. Please clarify. Thanks

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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05 December 2012 It is fully taxable in the hands of the employee.

However, if the payment is on account of voluntary retirement then it is exempt to a certain extent.

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