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Govt to exempt VRS income from taxes

In a bid to provide relief to the employees opting for early retirement, the government on Thursday decided to exempt (voluntary retirement scheme) VRS income from tax for employees who have completed 10 years of service or 40 years of age.

The Central Board of Direct Taxes on Thursday issued a notification amending rule 2BA of the Income Tax Rules for VRS takers.

The VRS income would be exempted from April 1 this fiscal, the CBDT said.

The government had earlier decided to exempt the VRS income in its Finance Act for 2002.

The move is expected to provide a fillip to thousands of employees in banks, public sector units and private companies who opted for VRS during the restructuring of their organisations.

CBDT also clarified that International Crops Research Institute for Semi-arid Tropics (ICRISAT) being an institution of national importance the VRS amount received by employees of ICRISAT would also be exempted.

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