💰 Tax Savings · Tax-free income (Section 10)
VRS compensation — up to ₹5 lakh tax-free (Section 10(10C))
✍️ EaseValue Advisors · Updated 17 Jul 2026 · FY 2025-26
In short
Compensation received under a genuine Voluntary Retirement Scheme (VRS) is exempt up to ₹5 lakh under Section 10(10C).
The exemption
Up to ₹5 lakh of VRS / voluntary separation compensation is tax-free, provided the scheme satisfies the Rule 2BA guidelines (offered to employees above a certain age/service, etc.).
Conditions
- The ₹5 lakh exemption can be claimed only once in a lifetime.
- You can't also claim Section 89 relief on the same amount — pick whichever helps more.
The law behind it
Section 10(10C) Rule 2BA
General information for FY 2025-26 (AY 2026-27), not advice on your specific case. Limits, rates and conditions
change with each Finance Act and depend on your facts — confirm before acting. © EaseValue Advisors LLP.
EaseValue