Section 35DDA → Section 36
Amortisation of expenditure incurred under voluntary retirement scheme (VRS)
Quick Answer
Section 35DDA of the Income Tax Act, 1961 (Amortisation of expenditure incurred under voluntary retirement scheme (VRS)) corresponds to Section 36 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 35DDA
The starting point is Section 35DDA of the Income Tax Act, 1961 — amortisation of expenditure incurred under voluntary retirement scheme (VRS). Allows an employer to deduct the amount paid to an employee under a VRS in 5 equal annual installments.
The new code maps this to Section 36: the provision is retained and renumbered as Section 36 of the Income-tax Act, 2025, applying from 1st April 2026. Retained. Helps companies manage the massive one-time payout tax impact during workforce rightsizing.
On the ground, changes to Section 35DDA carry a Medium impact. Standard HR and corporate finance provision.
Sec 35DDA
Provision Summary
Allows an employer to deduct the amount paid to an employee under a VRS in 5 equal annual installments.
Sec 36
Provision Summary
Retained. Helps companies manage the massive one-time payout tax impact during workforce rightsizing.
Key Changes & Highlights
- No change.
Frequently Asked Questions
What does Section 35DDA of the Income Tax Act 1961 deal with?
Section 35DDA of the Income Tax Act, 1961 covers amortisation of expenditure incurred under voluntary retirement scheme (VRS). Allows an employer to deduct the amount paid to an employee under a VRS in 5 equal annual installments.
Where does Section 35DDA of the ITA 1961 go under the Income-tax Act, 2025?
Section 35DDA of the Income Tax Act, 1961 maps to Section 36 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained. Helps companies manage the massive one-time payout tax impact during workforce rightsizing.
Why does the change to Section 35DDA matter for taxpayers?
The transition impact for Section 35DDA is rated Medium. Standard HR and corporate finance provision.
Disclaimer: This mapping of Section 35DDA (Amortisation of expenditure incurred under voluntary retirement scheme (VRS)) to Section 36 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 35DDA is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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