Taxability of severence pay
This query is : Resolved
31 July 2011
please help me regarding the following issue
company is an MNC based in india
my client was working in a company A (like Subsidairy ) then he was transfered to company B (Holding) with promotion, and includes a clause in offer letter that in case the process for which he was hired is closed or shifted due to increased cost then he will have following option they are
1. shift to the place process shift (Say outside india)
or
2.monetary comphensation on salary( like 7 month's salary & other allowance
My doubt is
1.monetary compensation what he received is taxable in india and can he get releif u/s 89
2. monetary compensation received by him will come or not in following
a)Retrenchment
b)Voluntary Retirement
c)profit in lieu of salary
company is an MNC based in india
my client was working in a company A (like Subsidairy ) then he was transfered to company B (Holding) with promotion, and includes a clause in offer letter that in case the process for which he was hired is closed or shifted due to increased cost then he will have following option they are
1. shift to the place process shift (Say outside india)
or
2.monetary comphensation on salary( like 7 month's salary & other allowance
My doubt is
1.monetary compensation what he received is taxable in india and can he get releif u/s 89
2. monetary compensation received by him will come or not in following
a)Retrenchment
b)Voluntary Retirement
c)profit in lieu of salary
01 August 2011
Reply 1-
-I do not think that he can get relief U/s 89. It will be fully taxed
Reply-2
Monetary Compensation received by him will be c) profit in lieu of salary.
-I do not think that he can get relief U/s 89. It will be fully taxed
Reply-2
Monetary Compensation received by him will be c) profit in lieu of salary.
04 August 2011
Then profit in lieu salary 17(3) can get releif u/s 89. i am also not sure about this, can you please see that whether he get releif or not, thank you for your earlier reply
04 August 2011
In Rule 21A(4) procedure has been laid down in respect of computation of relief in case
of Compensation on termination of employment.
The basic requirement of this rule prescribes that-
1. 3 years continuous service has been rendered.
2. Unexpired period of service should also be not less than 3 years.
I think that the service agreemwnt does not prescribe any duration for his services.
*
If you say- 7 month's salary & other allowance , and suppose 3 months out of it falls in the preceding financial year,
but I can say that being the tax rates are minimal in this FY he will hardly get any
relief.
of Compensation on termination of employment.
The basic requirement of this rule prescribes that-
1. 3 years continuous service has been rendered.
2. Unexpired period of service should also be not less than 3 years.
I think that the service agreemwnt does not prescribe any duration for his services.
*
If you say- 7 month's salary & other allowance , and suppose 3 months out of it falls in the preceding financial year,
but I can say that being the tax rates are minimal in this FY he will hardly get any
relief.
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