Section 35DDA: Amortize Voluntary Retirement Payments Over Five Years, Even Post-Retirement and After Business Restructuring.
Section 35DDA of the Income Tax Act allows an assessee to amortize expenditure incurred on voluntary retirement payments to employees. One-fifth of the payment can be deducted annually over five years, starting from the year of actual payment. This deduction applies even if payments are made post-retirement. In cases of business restructuring, such as amalgamation or demerger, the new entity can claim these deductions as if the transfer had not occurred, except in the year of restructuring. If payments are made in installments, each installment is eligible for separate amortization over five years.