Retrenchment Compensation

Retrenchment means cancellation of contract of service by employer. When the employee is terminated from the services of the company. The amount is calculated in accordance with the Industrial Disputes Act.

Below is the tax treatment for retrenchment compensation.

retrenchment

Note

  • If the person is getting monthly salary, then on the basis of the salary of last three calendar months
  • If the person is getting weekly wages, then on the basis of wages of last four completed week.
  • If the person is getting daily wages, then on the basis of wages of last twelve full working days.