Tax · Free tool
Severance / VRS Tax
Voluntary retirement scheme (VRS) payments up to ₹5 lakh are exempt under section 10(10C). Beyond that, taxable at slab. Pure severance / lay-off (non-VRS) is fully taxable.
₹8,00,000
15 yrs
30%
In-hand after tax
₹7,06,400
Gross severance₹8,00,000
Exempt (₹5L cap if VRS)₹5,00,000
Taxable amount₹3,00,000
Tax payable₹93,600
FAQ
Is gratuity exempt separately?
Yes — section 10(10): up to ₹20L exempt for non-govt employees with 5+ years service. Independent of severance / VRS exemption.
Cooling-off after VRS — can I rejoin?
10(10C) requires you not to be re-employed by the same employer or a related company. Rejoining the same group disqualifies the exemption — recovery follows.
Is severance & notice pay the same?
No. Notice pay = pay for the notice period you would have served (taxable as salary). Severance = additional ex-gratia (taxable, sometimes 10(10B) covered).