Sometimes employers declare V.R.S for the employees as per the scheme, The employers pay a good sum of money in lump some or in parts and the employees retire voluntarily

Deduction allowed under this section for such amount paid as VRS

Deduction Amount

  1. This Deduction is allowed in 5 year starting with the year when amount is paid (1/5  every year)
  2. No Deduction of VRS Expenses under any other Section
  3. In case amount paid in instalments , deduction allowed for each instalment separately in 5 years

QUESTIONS

Q1

Proft and Loss of A Ltd  
SALES 1000000
Less  
EXPENSES 400000
PROFIT 600000

Suppose expenses include VRS expenses of 100000

-a-

Computation of PGBP Income
Profit as per P& L A/c 600000
Add  
Expense Disallowed  
VRS Expenses 100000
   
Less  
Expense Allowed  
1/5 of VRS Expenses 20000
   
PGBP INCOME 680000

-ea-

  1. Income Tax
  2. PGBP Income
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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