The Statutory Brief

IT Act 1961 → 2025 / Section 10(10C)

Salary

Section 10(10C) → Section 19 (Sl. 12)

Voluntary retirement (VRS) compensation — ₹5 lakh

Section 10(10C) of the old Income-tax Act, 1961 · new section 19 (Sl. 12) under the Income-tax Act, 2025

New reference Section 19(1), Table Sl. No. 12 and 19(2)(e), (h)

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

  • Compensation on voluntary retirement under a scheme as per Rule 2BA guidelines — up to ₹5 lakh
  • Employees of companies, PSUs, authorities, co-operatives, universities, IITs, Governments and notified institutions
  • Once in a lifetime
  • No exemption if relief under section 89 is claimed on the same amount

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

Income-tax Act, 2025Section 19(1), Table Sl. No. 12 and 19(2)(e), (h)

  • Sl. No. 12: least of compensation received and ₹5,00,000 (amount in the Act itself)
  • 19(2)(h): same list of eligible employers
  • 19(2)(e): scheme as per guidelines; only once in a lifetime
  • No deduction if section 157 relief (old 89) was allowed on that amount

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

What changed

Renumbered from section 10(10C) into the section 19 table; ₹5 lakh limit and conditions unchanged.

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.

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(10C) in the new Income Tax Act?

Section 19(1), Table Sl. No. 12 of the Income-tax Act, 2025: VRS compensation up to ₹5 lakh, once in a lifetime.

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

Renumbered from section 10(10C) into the section 19 table; ₹5 lakh limit and conditions unchanged.

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

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 10(10C) of the 1961 Act. Section 19 (Sl. 12) of the 2025 Act applies from tax year 2026-27.

Related sections

16→19Deductions from salary: standard deduction, professional tax (and gratuity exemption)10(10B)→19Retrenchment compensation — ₹5 lakh limit89→157Relief when salary or family pension is received in arrears or in advance