How is the VRS compensation computed?

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• Is the compensation on Voluntary Retirement Scheme (VRS) taxable?

  Compensation on account of VRS is taxable as profits in lieu of Salary as per section 17(3) of the Income Tax Act. But in case of VRS by employees of Government/Semi-Government/Local Authorities/PSUs etc, this compensation is exempt up to the amount ...

• What are the guidelines for tax exemption of compensation received by an employee under VRS?

  The guidelines for tax exemption under VRS are as below: VRS applies to an employee of the company who has completed 10 years of service or 40 years of age. It is applicable to all employees and executives, except directors of a company. It must ...

• I am entitled to the compensation from the employer on account of VRS in a particular year but have received the same in the succeeding years in instalments. When is it taxable?

  In terms of section 15 and 17(3) the VRS compensation has accrued in the year in which your right to receive the same became crystallised. Therefore, the entire compensation will be taxable in the first year when it became due.

• Does the employer have to deduct TDS from VRS amount?

  No. There is no TDS on VRS amount if it is within the specified limits.

• How is the income from house property computed?

  The income from house property is computed after making certain deductions to the annual value or annual lettable value of the property. The first and most important step is the computation of annual value (AV) or (ALV) of the said property. The ...