Voluntary retirement deduction is limited to specified entities and schemes meeting service, age, workforce-reduction, and payment-cap conditions.

Deduction for amounts received on voluntary retirement or voluntary separation is available only to employees of specified entities, including public sector companies, other companies, authorities, local authorities, co-operative societies, universities, IITs, and notified institutions. The scheme must satisfy prescribed conditions, including minimum service or age, application to all employees other than directors, reduction of workforce, non-filling of vacancies, and a ceiling on the amount receivable based on service and salary. For public sector company voluntary separation schemes, the ten-years-of-service condition does not apply. Salary includes dearness allowance only where employment terms so provide.

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