Neutral impactEconomy
PayPal, Oracle, Volkswagen layoffs: How are severance packages taxed in India?
Mint 1 hr ago·6 Sept 2026, 10:07 am
Severance pay received by employees of multinational corporations like PayPal, Oracle, and Volkswagen is considered a taxable income source in India. This amount is added to the individual's annual salary and taxed according to their applicable income tax slab. The tax rate depends on the total income, which includes the regular salary and the lump sum received.
However, severance pay is not taxed in its entirety. The Income Tax Act provides an exemption for the amount received as compensation for loss of employment. This exemption is capped at a specific limit, which is adjusted annually for inflation. The taxable portion is the amount received above this exemption limit.
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