VRS Receipts Exemption limit
This query is : Resolved
25 June 2025
I received VRS receipts along with gratuity amount Rs 1675200/- and Rs 198420/- respectively in FY 2024-25. My employer deducted tax on my VRS receipts [on Rs 1675200/-]. Then how much exemption from my VRS receipts should I claim in my Income Tax return for AY 2025-26???
12 August 2025
Tax Treatment under Income Tax Act:
Gratuity exemption:
Gratuity received is exempt up to limits prescribed under Section 10(10) depending on whether you are covered under the Gratuity Act or not.
For non-government employees covered under Gratuity Act, the exemption limit is calculated as:
15 days salary for each completed year of service (or actual gratuity received if less).
Since you received Rs 1,98,420 as gratuity, this full amount or the exempt limit as per calculation is exempt.
VRS Compensation exemption (Section 10(10C)):
Exemption limit under Section 10(10C) is up to Rs 5,00,000 on compensation received on voluntary retirement.
Amount exceeding Rs 5,00,000 is taxable as salary income.
Gratuity exemption:
Gratuity received is exempt up to limits prescribed under Section 10(10) depending on whether you are covered under the Gratuity Act or not.
For non-government employees covered under Gratuity Act, the exemption limit is calculated as:
15 days salary for each completed year of service (or actual gratuity received if less).
Since you received Rs 1,98,420 as gratuity, this full amount or the exempt limit as per calculation is exempt.
VRS Compensation exemption (Section 10(10C)):
Exemption limit under Section 10(10C) is up to Rs 5,00,000 on compensation received on voluntary retirement.
Amount exceeding Rs 5,00,000 is taxable as salary income.
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