Retrenchment Allowanace

K R Ramesh (Service) (201 Points)

09 February 2009  

Hi

I have a query on the tax liability on retrenchment allowance received.  A company was closing its Delhi operation and given a choice to entire employee either to relocate to some other units situated in India or can leave the orginsation in which 2 months salary would be given as compensation. Can the said compensation received be treated as Retrenchment allowance u/s 10B for tax exemption or can this compensation received be treated as tax exempted in any section of the IT Act?

Please clarify

Thanks & Regards

Ramesh