Voluntary retirement isn’t just a career move — it’s a tax game. In a tightly packed thread on X, Sujit Bangar, founder of TaxBuddy.com, broke down how choosing the VRS route over severance can save lakhs in taxes — and why most people fumble it.

The key, Bangar said, lies in Section 10(10C) of the Income Tax Act, which offers up to ₹5 lakh exemption on VRS payouts. “Same ₹15 lakh, but ~₹1.5L lower base tax,” he noted, comparing two cases: Rajesh, who took severance, and Suresh, who went with VRS. Advertisement

Rajesh’s full ₹15L severance was taxed along with ₹4L notice pay — a ₹19L taxable slab. At 30%, that’s ₹5.7L in base tax.

Suresh, however, claimed the ₹5L 10(10C) exemption, dropping his taxable income to ₹14L and his base tax to ₹4.2L. A sharp difference — all due to route sele

See Full Page