06 Oct 2025 | 5 Mins Read
TCS hits employees with surprise layoff costs and taxes
Flipitmoney
Severance pay in India's IT sector is often subject to tax. It's classified as "profits in lieu of salary," making it fully taxable, unless exemptions apply. Key exemptions include retrenchment compensation, VRS (up to Rs 5 lakh), gratuity, and leave encashment. Employees must clearly understand the breakup of their severance package to claim exemptions and avoid disputes.