How much money I received from VRS is tax free?
Money up to Rs 5Lakhs received on account of voluntary retirement is exempt for any income tax. But there is a cap which says that in order to avail such a claim you must have completed 10 years if service of a minimum of 40 years of age. The tax free amount paid at voluntary retirement is limited to either three months salary multiplied by the number of completed years of service or balance months left till retirement multiplied by monthly emoluments.
The Income Tax act provides an exemption of up to Rs. 5 lakhs for VRS (Voluntary Retirement Scheme). In other words, any amount up to Rs. 5 lakhs that is received will be exempt while the remaining amount will be taxable under the head ‘Salary’.
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