Dear CAs/ Tax Experts
When someone has taken VRS and received severance pay + gratuity + Leave encashments , what all exact sections ( e.g: u/s 89 , 10(10) , 10(10AA) , 10(10C ) ) could be applied to avail tax exemptions for voluntary retirement or termination while filing ITR-1 ? do we need to fill any form (e.g: 10E ) in advance pls ?
What's the exact process and how to avail these ?
Best Regards
Gratuity: Exempt under Setion 10(10) of the income tax act, subject to certain limits.
Leave Encashment: Exempt under Section 10(10AA) for employees of non-government entities, with limits based on factors like last drawn salary and years of service.
Severance Pay/VRS Compensation: Exempt under Section 10(10C), subject to limits and conditions specified in the section.
To avail these exemptions while filing ITR-1:
Report the amounts received under each category
Claim exemptions under the relevant sections 10(10), 10(10AA), 10(10C) as applicable.
No specific form like 10E needs to be filled in advance for these exemptions in the context of ITR-1 filing for VRS benefits..
much appreciated for a clarified response Rama sir . Thanks .
a follow up question pls -
for FY24-25 , last date to file ITR file has been extended till 15/09/2025 where as I hear ( from some social media posts ) regarding late payment charges (interests ) beyond 31/07/2025 , is it true ?
can we file comfortably by 15/09/2025 or need to rush to file before 31/07/2025 ( day after tomorrow ) pls ?
Thanks in advance
Regards
Rama sir , I just noticed , we can't mention more than 5Lacs u/s 10(10C) which is VRS / severance Pay . Attaching the screenshot of income tax portal for your reference .
Kindly suggest how to proceed ?
Best Regards
CAclubindia
