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Last modified / updated Feb. 04, 2016

23. Retrenchment Compensation - Under Section 10(10B)

The retrenchment compensation received by a workman is exempt from income-tax subject to certain limits. An amount as per section 25F(b) of the Industrial Dispute Act, 1947 or Rs 5,00,000 whichever is lower. In special case any amount received as per any scheme

24. Amount received on voluntary retirement - Under Section 10(10C)

The scheme of voluntary retirement framed in accordance with Guidelines prescribed (Rule 2BA)and any payment received or receivable (even if received in installments) by an employee at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempt from income-tax to the extent that such amount does not exceed Rs. 5,00,000/-

Once the exemption is allowed under this clause in any assessment year, the same shall not be allowed in any other assessment year

From A.Y. 2010-11 if the assessee has been allowed relief u/s 89 for such payment in any assessment year, the exemption shall not be allowed under this clause.

25. Sum received under a Life Insurance Policy - Under Section 10(10D)

Sum received under a Life Insurance Policy including the sum allocated by way of bonus on such policy other than the following is exempt under section 10(10D):

  1. any sum received under section 80DD(3) or section 80DDA(3); or
  2. any sum received under a Keyman insurance policy; or
  3. any sum received under an insurance policy issued on or after 1.4.2003, but on or before 31-03-2012, in respect of which the premium payable for any of the years during the term of the policy exceeds 20 percent of the actual capital sum assured; or
  4. any sum received under an insurance policy issued on or after 1.4.2012 in respect of which the premium payable for any of the years during the term of the policy exceeds 10 percent of the actual capital sum assured; or
  5. any sum received under an insurance policy issued on or after 1.4.2013. In cases of persons with disability or person with severe disability as per Sec 80 U or suffering from disease or ailment as specified in Sec 80DDB, in respect of which the premium payable for any of the years during the term of the policy exceeds 15 percent of the actual capital sum assured

However, any sum received under such policy referred to in (3), (4) and (5) above, on the death of a person would be exempt.


Links & Description of Contents

Scheme of Tax Deduction at Source from "Salaries"Income Chargeable under - "Salaries"Income Exempted Under The Head "SALARIES"
1 - Section 192 Provisions on Taxable Income
2 - Relief When Salary Paid in Arrear or Advance
3 - Claim of Deduction of Interest u/s 24 (b)- Income from House Property
4 - Due dates for payment of TDS
5 - Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted
6 - Certificate for Tax Deducted (Section 203)
7 - TRACES
8 -Furnishing Particulars pertaining to perquisites
9 - Mandatory Quoting of PAN and TAN
10 - TDS on Income from Pension
11 - Income Chargeable Under the Head "Salaries"
12 - Definition OF "Salary"
13 - Perquisite - Rent Free Accomodation & Motor car provided by the Employer
14 - Perquisite - Gas, electricity & water for household consumption
15 - Interest free or concessional loans
16 - Value of Subsidized / Free food / non-alcoholic beverages
17- Transfer Grant Allowance
18 - Medical Reimbursement by the Employer
19 - Leave Travel Concession (LTC)
20 - Death-cum-Retirement Gratuity
21 - Commutation of Pension
22 - Leave Encashment
23- Retrenchment Compensation
24 - Amount received on voluntary retirement
25 - Sum received under a Life Insurance Policy
26 - Payment from a Provident Fund
27 - House Rent Allowance
28 - Pension to Gallantry Awarded
29 - Medical Treatment provided by Employer
30 - Entertainment Allowance
31 - Professional Tax











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