Bengaluru: The recent layoffs at global payments company Visa have reignited debate over the taxation of severance packages in India, after a Bengaluru-based employee criticised the practice of taxing compensation paid to workers who lose their jobs.
The discussion gained momentum after Saurav Kundu, a senior manager at Visa, shared a LinkedIn post following reports that the company had reduced its workforce by around 7 per cent.
‘Taxing severance is inhumane’
In his post, Kundu argued that severance pay is intended to provide financial support to employees during an unexpected job loss and should not be subject to income tax.
“Taxing severance is inhumane and needs to change,” he wrote, adding that such compensation is meant to help employees manage financial uncertainty while searching for new opportunities.
His remarks quickly resonated with professionals, entrepreneurs and corporate employees, many of whom echoed similar concerns about the current tax treatment of severance packages.
Professionals seek policy review
The discussion has sparked broader conversations on social media, with several users arguing that severance payments are fundamentally different from regular salaries and should receive more favourable tax treatment.
Many professionals said taxing compensation meant to cushion the impact of layoffs places an additional burden on employees who are already dealing with income loss and career uncertainty.
Others called for policymakers to revisit existing tax provisions to ensure that workers facing involuntary job losses receive adequate financial relief.
Layoffs renew focus on employee welfare
The debate comes amid continued restructuring across the global technology and financial services sectors, where several companies have announced workforce reductions over the past year.
While the government has not indicated any immediate changes to tax rules governing severance payments, the discussion has renewed attention on balancing tax policy with employee welfare during periods of economic uncertainty.
The viral LinkedIn post has highlighted growing calls for reforms that many believe would provide greater financial protection to employees affected by corporate layoffs.