Visa Layoffs Spark Debate on Social Media Over Tax on Severance Pay

Visa layoffs affecting 7 per cent of its staff have triggered a debate over the tax treatment of severance pay in India.

Advertisement

The issue gained attention after Saurav Kundu, a senior manager at Visa, raised concerns about severance taxation in a LinkedIn post. He questioned whether employees who lose their jobs should face a significant tax burden on payments intended to support them during the transition.

Kundu said layoffs have become increasingly common, while companies are making greater efforts to support affected employees through financial assistance, flexible benefits and job placement services.

However, he argued that taxes on severance payments can reduce the amount employees finally receive.

“Many employees who have been diligent about filing their IT returns and being transparent with the government now face heavy tax bills on the very payments meant to protect them,” Kundu wrote.

Advertisement

Call for Changes in Tax Treatment

Kundu called for exempting or reducing tax on severance payments. He said such a change could provide greater financial support to families during periods of unemployment and complement the assistance being offered by employers.

“Exempting or reforming the tax treatment of severance would be a simple, compassionate policy change that could make a real difference for families during an already vulnerable time,” he added.

Also Read: Schaeffler India Appoints Amit Bhalerao as Chief Operating Officer

The LinkedIn post received responses from users who raised similar concerns about the treatment of severance pay. One user argued that tax treatment should take into account the purpose of severance, which is to cushion the impact of an involuntary loss of income.

Advertisement

Another user described taxation of severance as an additional financial burden for people who have just lost their jobs. The user also suggested considering tax relief for career transition support and reskilling.

Earlier Concerns From Entrepreneur

Bengaluru-based entrepreneur Sanket Sheth had previously raised a similar concern.

He argued that employees who have spent years paying taxes should not face another major deduction on compensation received after losing their jobs, particularly when the payment is intended to provide temporary financial support.

The discussion raises a broader question over whether severance payments should be treated as regular taxable income or receive different tax treatment because they are linked to involuntary job loss.

For HR teams, the issue is relevant because severance is part of how companies support employees during layoffs and other workforce reductions.

Any change in tax treatment could affect the amount employees receive from such payments and the way employers structure separation support.

Visa Layoffs

Visa’s global layoffs are affecting about 2,600 employees, or 7 per cent of its workforce. The company has said technology and product teams account for most of the job cuts.

The layoffs are not limited to junior employees. Reports indicate that senior positions are also affected, including six Vice Presidents, 37 Senior Directors and 16 Chief Engineering and Architect roles.

In India, reports suggest that employees at Visa’s Bengaluru technology centre have also been affected. However, Visa has not publicly confirmed a detailed India-level or designation-wise breakup of the layoffs.

Note: We are also on WhatsApp, LinkedIn, and YouTube to get the latest news updates. Subscribe to our Channels. WhatsApp– Click Here, YouTube – Click Here, and LinkedIn– Click Here