The Statutory Brief

IT Act 1961 → 2025 / Section 10(10B)

Salary

Section 10(10B) → Section 19 (Sl. 10–11)

Retrenchment compensation — ₹5 lakh limit

Section 10(10B) of the old Income-tax Act, 1961 · new section 19 (Sl. 10–11) under the Income-tax Act, 2025

New reference Section 19(1), Table Sl. Nos. 10–11 and 19(2)(c), (d)

Income-tax Act, 1961Section 10(10B)

  • Compensation to a workman on retrenchment — least of actual, 15 days' average pay per completed year (Industrial Disputes Act, s. 25F(b)), and ₹5 lakh
  • ₹5 lakh notified (Notification 10969, 25 June 1999)
  • Fully exempt under a scheme approved by the Central Government
  • Includes compensation on closure or adverse transfer of the undertaking

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 19(1), Table Sl. Nos. 10–11 and 19(2)(c), (d)

  • Sl. No. 10: least of compensation received, amount under section 25F(b) of the Industrial Disputes Act, and the notified amount (not less than ₹50,000) — ₹5 lakh
  • Sl. No. 11: entire amount if paid under an approved scheme
  • 19(2)(c): closure of undertaking and adverse transfer of ownership treated as retrenchment
  • 19(2)(d): 'employer' and 'workman' as in the Industrial Disputes Act

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Renumbered from section 10(10B) into the section 19 table; the ₹5 lakh notified limit continues under section 536(2)(j).

Practice notes

  • Available under both regimes.
  • Note on form: in the 2025 Act these are deductions in computing salary (section 19 table), not exemptions under section 10 — the effect is the same.
  • Only 'workmen' as defined in the Industrial Disputes Act qualify; managerial staff usually do not.

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

What is section 10(10B) in the new Income Tax Act?

Section 19(1), Table Sl. Nos. 10–11 of the Income-tax Act, 2025, with a ₹5 lakh limit.

What changed in section 10(10B) under the new Income Tax Act?

Renumbered from section 10(10B) into the section 19 table; the ₹5 lakh notified limit continues under section 536(2)(j).

Is section 10(10B) still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 10(10B) of the 1961 Act. Section 19 (Sl. 10–11) of the 2025 Act applies from tax year 2026-27.

Related sections

16→19Deductions from salary: standard deduction, professional tax (and gratuity exemption)10(10C)→19Voluntary retirement (VRS) compensation — ₹5 lakh