VRS COMPENSATION,10 (10C),SECTION 89

Dear Ridhi,

Various judgements had held that both Relief u/s 89 plus exemption u/s 10 can be claimed in respect of VRS Compensation.

But, the following proviso is inserted in section 89 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :

Provided that no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i) of clause (10C) of section 10, a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under clause (10C) of section 10 in respect of such, or any other, assessment year.

The following proviso is inserted after the second proviso to clause (10C) of section 10 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010:

Provided also that where any relief has been allowed to an assessee under section 89 for any assessment year in respect of any amount received or receivable on his voluntary retirement or termination of service or voluntary separation, no exemption under this clause shall be allowed to him in relation to such, or any other, assessment year;

As far as VRS from 2 employers is concerned -Sec 10 has this proviso -

Provided further that where exemption has been allowed to an employee under this clause for any assessment year, no exemption thereunder shall be allowed to him in relation to any other assessment year

Therefore theoritically if Compensation on VRS from both employers is received in a same FY then yes exemption in respect of both can be claimedare but amount will not exceed 5 Lacs. Otherwise once this section is claimed then it cannot be claimed again.