• Can an Software Engineer be termed as a workman and claim benefits under section 10(10B)

I was laid off in the previous financial year working as a software engineer for a firm. I worked as an Independent Contributor, that means I had no supervisory powers, I had no say in hiring, firing or any budget approvals. Neither did I have any people reporting to me. My work was only skill-based execution. 

I was paid two months of my salary as severance. 

I was issued a termination letter that clearly mentions, "<company> will duly settle your full and final payment within the appropriate time frame,
including payment in lieu of notice, arrears of accrued but unpaid salary up to the
Separation Date, compensation for any accrued but unused holidays, retrenchment
compensation, and any other accrued contractual dues, as applicable. These payments are
made in accordance with the applicable law and are subject to any applicable deductions
and withholdings."

Can I consider myself as a workman under The Industrial Disputes Act 1947 and claim tax exemptions on my severance salary under section 10(10B)?
Asked 2 months ago in Income Tax

 

You likely qualify as a "workman" under the Industrial Disputes Act, 1947, since you worked purely as a software engineer without any managerial or supervisory role. Your severance/termination compensation can be considered retrenchment compensation. Therefore, you are eligible to claim tax exemption on this amount under Section 10(10B) of the Income Tax Act, subject to applicable limits (up to ₹5 lakh).

To ensure your eligibility and get help with documentation or filing, please book a phone consultation with a tax expert for personalized guidance.

 

 

 

 

 

 

Shubham Goyal
CA, Delhi
501 Answers
15 Consultations

Yes — based on what you’ve described, there’s a good chance you can be considered a “workman” under the Industrial Disputes Act, 1947, and therefore claim the exemption under Section 10(10B) of the Income-tax Act for retrenchment compensation — but there are some important nuances and grey areas to be aware of.

If you want, we can assist you in drafting a model computation + disclosure note for your ITR so that even if CPC flags it, you have a ready legal and factual basis for the exemption.

 

Feel free to reach out to us !
www.thewitcorp.com

Damini Agarwal
CA, Bangalore, Bengaluru
560 Answers
31 Consultations

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