Retrenchment Compensation [Section 10(10B)]
Retrenchment means cancellation of contract of service by employer. Any compensation received by a worker at the time of retrenchment is exempted to the extent of minimum of the following:
An amount calculated in accordance with the provisions of Sec. 25F(b) of Industrial Dispute Act. (Under the said Act a workman is entitled to retrenchment compensation equivalent to 15 days' average pay, for every completed year of service or any part thereof in excess of 6 months);
Actual Amount received.
In case, where the compensation is paid under any scheme approved by the Central Government nothing shall be taxable.
Compensation received by a workman at the time of closing down of the undertaking in which he is employed is treated as compensation received at the time of his retrenchment.