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Severance pay is not taxable

A recent high court judgement classifies such income as capital receipt

Tapati Ghose & Prakash Hegde 

The taxation of severance pay has many a times been a point of dispute between the recipients and the Income Tax authorities. While the professional feels that the compensation for loss of income should not be taxed, the taxman takes the view that the severance pay is a gain to the professional as there's no loss of competence to earn further professional income if one employment contract is terminated. The taxation of such payment depends on whether the assessing officer is classifying it as a capital receipt or revenue receipt. We generally think that any money received is subject ...

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Severance pay is not taxable

A recent high court judgement classifies such income as capital receipt

A recent high court judgement classifies such income as capital receipt The taxation of severance pay has many a times been a point of dispute between the recipients and the Income Tax authorities. While the professional feels that the compensation for loss of income should not be taxed, the taxman takes the view that the severance pay is a gain to the professional as there's no loss of competence to earn further professional income if one employment contract is terminated. The taxation of such payment depends on whether the assessing officer is classifying it as a capital receipt or revenue receipt. We generally think that any money received is subject ... image
Business Standard
177 22

Severance pay is not taxable

A recent high court judgement classifies such income as capital receipt

The taxation of severance pay has many a times been a point of dispute between the recipients and the Income Tax authorities. While the professional feels that the compensation for loss of income should not be taxed, the taxman takes the view that the severance pay is a gain to the professional as there's no loss of competence to earn further professional income if one employment contract is terminated. The taxation of such payment depends on whether the assessing officer is classifying it as a capital receipt or revenue receipt. We generally think that any money received is subject ...

image
Business Standard
177 22