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 result in an overall reduction in the number of employees.
Vacancy caused by the VRS is not to be filled up.
The retiring employee cannot be accommodated in any other business belonging to the same management.
The amount receivable on account of VRS must be calculated as per the conditions discussed in Q2 above.
The above amount, in any case, should not exceed Rs. 5 lacs.
The employee must not have availed the benefit of any other voluntary scheme in the past.

If any of the above guidelines are not followed, the VRS payment will not be tax-exempt.

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

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

Related Articles

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

Has the exemption of amount received under VRS been extended to central and state government employees?

How is the VRS compensation computed?

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

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?