TaxTMI 
TaxTMI 
Guidelines for the purposes of section 10(10C) of the Income-tax Act--Clarification of the queries--Regarding
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....ovisions of this clause, the payments on account of voluntary retirement are to be exempt from income-tax only if the schemes governing the said payments are in accordance with the guidelines prescribed in this behalf. It has further been provided that such guidelines may include the criteria of economic viability. In the case of companies other than public sector companies, the schemes are not only to be in accordance with the prescribed guidelines but are also to be approved by the Chief Commissioner or, as the case may be, the Director- General in this behalf. The amended provisions apply in relation to the assessment year 1993-94 and subsequent years. 2. The guidelines for the purposes of section 10(10C) of the Income-tax Act have been....
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....ion 10(10C) in the Income-tax Rules was notified on 18th August, 1992, and also came into force with effect from the said date. 4. The Board have received a number of queries with reference to these guidelines. These are clarified as under: Question 1: As rule 2BA regarding guidelines for the purposes of section 10(10C) has come into force with effect from 18th day of August, 1992, whether the payments made under the schemes of voluntary retirement between 1st April, 1992, and 18th August, 1992, will get the benefit of income-tax exemption? Answer: The provisions of section 10(10C) of the Income-tax Act have been amended through the Finance Act, 1992, with effect from 1st April, 1993. Accordingly, the amended provisions will apply in rel....
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....e that the amount representing the lower of the aforesaid two limits is to be allowed under the scheme of voluntary retirement. The amount receivable by an employee on account of his voluntary retirement can be either of the aforesaid two amounts. However, the amount which will qualify for exemption under section 10(10C) will be up to rupees five lakhs only. Question 4: What is the meaning of the expressions "salary" and "monthly emoluments" used in item (v) of rule 2BA? Answer: These expressions mean salary including dearness allowance, if the terms of employment so provide, but exclude all other allowances and perquisites. Question 5: When payment is to be computed on the basis of one and one-half month's salary for each completed year....
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....completed ten years of service or forty years of age. Since the employee of a company (presuming that he is less than forty years of age) which has been set up less than ten years ago, cannot satisfy the aforesaid requirement, the amount receivable by him shall not be entitled to income-tax exemption under section 10(10C). Question 9: Can the scheme of voluntary retirement be made applicable to the employees of an undertaking of a company rather than the entire company? Answer: Item (iii) of rule 2BA provides that the scheme of voluntary retirement should be drawn to result in overall reduction in the existing strength of the employees of the company. If the said condition is met, the scheme framed can be made applicable to the employees ....