iii. VRS
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.
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 ...
Can VRS be extended only by loss-making companies?
The guidelines of VRS clearly state that handing out the golden handshake should result in overall reduction in the existing strength of the employees of the company. This means that even profit-making companies can use VRS to reduce the size of ...
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?
No. VRS will be tax exempt only for the employees who have completed 10 years of service with a company. Therefore, if the company is less than 10 years old, VRS will not be tax-exempt.
Is the entire amount receivable on account of VRS taxable, or only the excess of the amount above Rs. 5 lacs?
Only the amount which is in excess and above Rs. 5 lacs is taxable, as per I-T rules.
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 ...
If this exemption has been allowed to any employee for any assessment year can it be allowed in another assessment year also?
No. It shall be allowed to him only once in a life time.
Has the exemption of amount received under VRS been extended to central and state government employees?
Yes. The exemption of amount received under VRS is extended to all employees of the Central Government w.e.f. Assessment Year 2002-2003 and for all State Government employees w.e.f. Assessment Year 2001-2002.
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.
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 ...
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 ...