Tax liability on premature Retirement On medical ground

POSTED BY kishor ON September 27, 2010 12:39 pm ONE COMMENT

If employee from private sector company gets prematur voluntary retirement on medical ground & he is to receive Rs 10,00,000 as compensation under the scheme defined by company for the purpose, wht will be tax liability on this amount & how much TDS an employer is suppose to deduct?

One reply on this article “Tax liability on premature Retirement On medical ground”

  1. Madhav says:

    Voluntary Retirement compensation is exempted U/s. 10(10c) – SUBJECT TO Conditions.
    a) Maximum exemption is Rs. 5lakhs
    b) It is as per the scheme within the prescribed guidelines.
    c) It should be from the undertaking mentioned in the section.

    If above have been satisfied, can claim exemption upto Rs. 5Lakhs & also can claim Relief U/s. 89. If not, they can claim only relief U/s. 89 – but entire amount will be taxable.

    Further with regard to TDS – it is based on the taxability of the amount. If exemption applies – employer can consider the exemption amount and deduct TDS – if not they have to deduct based on applicable rate

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