In case of a company which is set up less than 10 years ago, is the VRS receivable by an its employees exempt from tax?

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• 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 ...

• Will the VRS be tax exempt if it is given in addition to normal retirement benefits like PF, gratuity, pension etc. under employment terms?

  Yes. The provisions of VRS exemption are separate from the provisions which govern the taxation of other retirement benefits like Provident Fund, Gratuity, Pension, etc. Hence, VRS amount will be tax exempt even if other retirement benefits are ...

• 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 ...

• If a particular source of income is exempt from tax, then can the loss from such income be set off against any other taxable income?

  No, you cannot set off a loss from a tax-exempt income with a taxable income. E.g., Agricultural income is exempt from tax. Therefore, if the taxpayer incurs a loss from agricultural activity, it cannot be adjusted against any other taxable income. ​

• What will happen if my current year refund amount is less than the outstanding balance of the previous years?

  If your refund amount is less than the outstanding tax liability, the balance amount will still reflect as outstanding, and will be adjusted with future years’ refunds.