What is the maximum exemption limit in case of compensation received on voluntary retirement?

What is compensation on voluntary retirement?

Features of Voluntary Retirement Scheme

Companies clear Provident fund (PF) and gratuity dues at the time of retirement under VRS. The compensation paid under VRS is income tax-free up to Rs. 5 lakhs under section 10 (10C) of the Income Tax Act.

What is maximum exemption limit?

The maximum exemption limit for an individual and HUF is Rs. 250000. However, for senior citizen of age 60 years or more but less than 80 years is Rs. 300000 and for 80 years or above it is Rs.

Is voluntary retirement benefits taxable?

Benefits Availed By The Employee After Voluntary Retirement

Please note: the compensation received is tax free up to a prescribed amount.

What is section 10 exemption in income tax?

Section 10 of the Income Tax Act covers many allowances such as Leave Travel Allowance, Uniform Allowance, Travelling Allowance, House Rent Allowance and some more. However, some special allowances that are exempt fall under Section 10 (14).

What is section 89 in income tax?

Claiming relief under section 89 –

As per Section 89(1), tax relief is provided by recalculating tax for the year in which arrears are received and the year to which the arrears pertain; and the taxes are adjusted in the year in which they were due. Note: Form 10E has to be filed before filing of the Income Tax Return.

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How is VRS compensation calculated?

VRS Calculation

The VRS amount is limited to an amount that is equal to three months’ salary of each completed year of service. Or in another way of calculation is the salary at the time of retirement multiplied by the rest of the months of service before normal retirement.

Is VRS compensation taxable?

A Salaried man can receive VRS more than once in his lifetime. But he can plan his tax liability only once. … Thus, the VRS received is taxable in the hands of employee under the head ‘Income from Salary’.

Is voluntary retirement compensation an abnormal loss?

Voluntary retirement is the form of retirement that takes place prior to the actual age of retirement, i.e., 60 years. It takes place due to certain causes like poor health, a weird condition of the company and many more. If inferred in detail, it is an abnormal loss.

What is the basic exemption limit for senior citizens?

A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2020-21 available to a resident senior citizen is Rs. 3,00,000.

What is TDS limit?

Items Liable for a TDS Deduction

For the assessment year, 2020-2021 the exemption limit for an individual is Rs 2,50,000. Section 194B – TDS on winning from lottery, crossword or any game: A TDS of 30% is deducted from any amount received by the way of lottery, crosswords or any other game if the amount exceeds Rs.

What is basic exemption amount?

Tax-free basic personal amounts

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For the 2020 tax year, the federal basic personal amount is $13,229 (for taxpayers with a net income of $150,473 or less). This means that an individual Canadian taxpayer can earn up-to $13,229 in 2020 before paying any federal income tax.