Is the entire amount receivable on account of VRS taxable, or only the excess of the amount above Rs. 5 lacs?

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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 ...

• How is the VRS compensation computed?

  The compensation of VRS is computed by the authority as per the scheme framed by them. The amount receivable by the employee on account of voluntary retirement should not exceed: i) the amount equivalent to 'three months’ salary for each completed ...

• 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.

• I have paid property tax for the past years in this year. Can I claim deduction for entire amount of property tax paid?

  Yes. You can claim deduction for entire amount of property tax paid. The deduction on account of property tax is on a payment basis and not on the basis of charging year of such property tax.