Question ID : 28556

Compensation received on termination of employement

Hi, Is compensation received on termination of employment by employer (layoff) taxable in the hands of recipient employee?

Answer ID : 65421

No, seems exemption as per sec 10(10B) of the Income-tax Act, 1961 can be sought for.

Answer ID : 65427

It is taxable under income from other sources us 56(2)(xi) of the income tax Act. Section 56(2)(xi) contemplates that any compensation or other payment, due to or received by any person, by whatever name called, in connection with the termination of his employment or the modification of the terms and conditions relating thereto is taxable in the hand of recipient.

Answer ID : 65432

Section 10(10B) applies in case of closing of the undertaking {see explanation (a)}, whereas 56(2)(xi) is not speaking about closing.

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