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Section I: Income Tax and Your Career
- Ques: Money received up to Rs. 5 lakh at voluntary retirement or termination is fully exempt
- Ans: Key points:
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Money received up to Rs. 5 lakh at voluntary retirement or termination is exempt.
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You can take voluntary retirement benefit from multiple employers, but the tax-free amount is limited to Rs. 5 lakh.
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For claiming exemption employee must have complete 10 years of service or 40 years of age.
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Tax-free amount paid at voluntary retirement is limited to minimum of
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3 months of salary x number of completed year of service, or
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balance months left before retirement age x monthly emoluments at the time of retirement
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Vacancy caused by voluntary retirement should not be filled up by replacement. It should be a reduction in workforce.
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