## Retrenchment Compensation [Section 10(10B)]
### Exemption — lower of three
The lowest of the following is exempt:
1. 15 days' average pay × completed years of service (a part of a year exceeding 6 months counts as a full year)
2. Statutory limit of ₹5,00,000 (as notified by the Central Government)
3. Actual amount received
Special case: these limits do not apply if compensation is paid under a scheme approved by the Central Government for the special protection of workers — then the whole amount is exempt.
### Average pay computation (average of wages payable to the workman)
- Monthly paid: average of the last 3 complete calendar months
- Weekly paid: average of the last 4 calendar weeks
- Daily paid: average of the last 12 full working weeks
- Computed for the period preceding the date on which average pay becomes payable; if the full period was not worked, base it on actual days worked.
### Wages — include vs exclude
Include: all remuneration expressible in money — allowances (including D.A.), value of house accommodation/utilities/amenities or concessional food, travel concessions, sale-related commissions.
Exclude: bonuses, contributions to retirement benefit schemes, gratuity payable on termination.
### Regime
Exemption under Section 10(10B) is available irrespective of the tax regime.