Deductions available for severance received

[Karan]

Hi,

Are there any deductions available for severance received when employment was terminated. I received 3 months of salary as severance. I was a white collared managerial employee.

AI Summary

Three-month severance usually taxed as employment income; deductions depend on tax code and payment characterization A three-month severance payment is generally treated as taxable employment income and taxed under ordinary salary rules. Deductions depend on the applicable tax code: you may claim standard employment deductions (for example, professional tax or any statutory standard deduction), and specific components may be exempt if they meet statutory criteria (gratuity, provident fund, or compensation for loss of office under local law). Severance characterized as damages for personal injury or as a tax-exempt statutory benefit can differ. Determine the payment's characterization under your jurisdiction's income tax provisions and consult a tax advisor for precise filing and available deductions.