Voluntary retirement exemption requires a qualifying scheme, workforce reduction, and a strict salary-based monetary cap. Voluntary retirement or voluntary separation compensation is exempt from income tax only within a prescribed monetary ceiling and only where the scheme satisfies strict eligibility and structural conditions. The exemption applies to payments received under qualifying schemes framed by specified employers, including companies, public sector companies, authorities, local authorities, co-operative societies, universities, IITs, governments, and notified institutions. The scheme must reduce overall employee strength, bar replacement of the vacancy, exclude directors, and prevent re-employment under the same management, while the receivable amount must remain within the prescribed salary-based formula.