Avail of tax relief on terminal compensation: Here's how to file Form 10E

You must have completed 3 years of continuous service and have another 3 years of employment left

Many lost their jobs in financial year 2020-21 (FY21) because of the pandemic-led disruption. Any compensation such a person received from their employer when terminated is taxable as salary in their hands at the slab rate applicable on them. However, the employee can claim tax relief on this income under Section 89 of the Income Tax (I-T) Act, according to Rule 21A of the I-T Rules, 1962.

Apart from compensation on termination, relief under Section 89 is also allowed on several other types of incomes. Chartered accountant Vikash Mittal, partner, Vikash Mittal and Associates, says, “It could be salary received in