VRS, or The Golden Handshake, is a compensation that is exempted from tax either partially or completely. There are other post-retirement benefits such as gratuity and pension that also fall into the same category.
On sequestration, a government employee is usually entitled to a lot of retirement benefits, which is why government jobs are considered to be the most secure and much sought-after. But these perks are not tax-free. This is clearly specified under the heading 'Salaries' as returns in the place of of salaries as mentioned in section 17 (3) of the Indian Income Tax Act. Nevertheless, with regard to a few of them, being exempted from tax is allowed under section 10 of the law, either completely or partially.
Let us explore the exemptions in detail:
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