BSNL VRS: A Return Filed on Employer’s Tax Treatment Does Not End Exemption Claim

Chamblon Reeta Vs ITO (ITAT Bangalore)

BSNL VRS: A Return Filed on the Employer’s Tax Treatment Does Not End the Exemption Claim

Many BSNL employees who opted for the 2019 Voluntary Retirement Scheme (VRS) filed their returns using the exemptions reflected by BSNL in Form 16. Some claimed only ₹5 lakh under section 10(10C) against their VRS compensation. They also offered part of their leave encashment to tax. After decisions in other BSNL employees’ cases, they sought exemption for the full receipts under different provisions.

By then, their returns had been processed and their appeals before the Commissioner of Income Tax (Appeals) were substantially delayed. Could the claims be considered despite that delay and despite not having been made in the original returns? In a common order covering six appeals, the Bengaluru ITAT answered in the employees’ favour. It directed the Assessing Officers (AOs) to grant appropriate relief under sections 10(10B) and 10(10AA)(i).

What Chamblon Reeta had originally claimed

Chamblon Reeta, who had been absorbed into BSNL from the Department of Telecommunications, opted for retirement under BSNL VRS 2019. The Tribunal’s order records that she received ₹14,28,453 as VRS ex gratia during the relevant year. BSNL deducted tax after allowing an exemption of ₹5 lakh under section 10(10C), and her return followed that treatment.