08/08/2026
India may be taxing people for losing their jobs.
Read that again.
A person works for years.
Pays income tax.
Contributes to the economy.
Then the company restructures.
The job disappears.
And the money meant to help that person survive the transition can still be treated like ordinary income.
Where is the safety net?
This is where the conversation gets uncomfortable.
We keep telling employees to build resilience.
But neuroscience tells us something important.
When financial security suddenly disappears, the brain does not experience it as a simple accounting problem.
It can trigger a threat response.
Uncertainty increases vigilance.
Cognitive bandwidth gets consumed by survival questions.
How will I pay the EMI?
What about my children's education?
What if I don't get another job for six months?
Now imagine asking that brain to
“stay positive.”
“think strategically.”
“upskill.”
“start again.”
The problem isn't always a lack of resilience.
Sometimes the environment has removed the psychological runway required to recover.
And here is the controversial part.
Severance isn't just compensation.
For many families, it is the bridge between employment and unemployment.
It buys time.
Time to think.
Time to search.
Time to protect the family.
Time to make rational decisions instead of desperate ones.
So perhaps we are asking the wrong question.
Instead of asking:
“Should severance be taxed?”
Maybe we should ask:
“Should survival money be treated exactly like earned income?”
Because when someone loses their job, they don't just lose a salary.
They can lose predictability.
Identity.
Status.
Routine.
And sometimes even their sense of control.
The neuroscience of financial stress tells us that economic policy isn't only about numbers.
It can become a mental health issue.
🔥 My question to CEOs, policymakers and employees:
If India expects workers to pay taxes during their years of employment,
shouldn't the system give them a stronger bridge when employment suddenly disappears?
Agree or disagree.
But don't scroll past this one.
What would you change?
Kreative Kode
Sanket Sheth