Is severance package taxable?

Gayathri (Chartered Accountant) (286 Points)

29 March 2019  

An employee of a private software company was asked to resign on 6th March 2019 with immediate effect after serving for 1.25 years. He got a severance package of 5 months salary and ex gratia on 29th March.

The company has deducted tax at 30%.

Is this amount eligible for exemption u/s 10(10b)?