Tax exempt on VRS cash of State and Central workers

Tax exempt on VRS cash of State and Central workers
PRESS TRUST OF INDIA

NEW DELHI, MAR 1: To facilitate the process of "right-sizing" the government departments, the Union Budget has proposed tax exemption to Voluntary Retirement Scheme (VRS) amounts of state government employees from the next fiscal and a similar exemption for central government employees from April 2002.

Budget 2001: Full Coverage

The Finance Bill tabled in Parliament yesterday extended the facility under Section 10 of Income Tax Act providing tax exemption to any amounts received by an employee of a public sector company after voluntary retirement, also to the employees of state and central government also.

The Section 10 provides for excluding VRS income of employees of PSU companies while computing his total income and the exemptions are available for amounts received upto Rs. 5 lakhs and if the payment is in accordance with a VRS framed by the employer.

While the facility would be effective for state government officials from the next fiscal, it would be applicable for central government officials from April 2002, the Bill said.