Due to 6th pay commission Central and State Government Employee always able to give Arrears of Previous year. And thus Employee pays more taxes in the Current Financial Year only due to
arrears. Therefore, employee pay tax in huge amount. In this respective employee wants tax relief u/s 89(1), but, it is more difficult to calculate relief under section 89(1) as per income tax act. In this connection Tax relief calculator on arrears of previous years received in
2012-13 relating to financial year 2005-06 onwards.
Tax relief when salary received in arrears or in advance
As the arrears of salary relates to 6th pay commission
is being received by the employees. When a person/employee receive
arrears or any advance in a financial year , he should collect complete information
from their employer like as year wise amount of arrears/advance. If you
have year wise amount of arrear then you can bifurcate your income
year wise. In this way you can save income tax on your income under section 89.
Who is eligible to allow relief u/s 89 (1) Some specified DDO's can allow relief under section 89(1) . List of employers who can allow benefit u/s 89(1), if claimed by employee, is given as under :-
- company,
- Co-operative Society
- Local Authority
- University,
- Institution,
- Association or body
- Govt State or center
- Public sector undertaking
Complete detail regarding section 89 is given as under:-
45[Relief when salary, etc., is paid in arrears or in advance.
89. Where
an assessee is in receipt of a sum in the nature of salary, being paid
in arrears or in advance or is in receipt, in any one financial year,
of salary for more than twelve months or a payment which under the
provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section 57,
being paid in arrears, due to which his total income is assessed at a
rate higher than that at which it would otherwise have been assessed,
the Assessing Officer shall, on an application made to him in this
behalf, grant such relief as may be prescribed46.]
The following proviso shall be inserted in section 89 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :
Provided that no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement
or termination of his service, in accordance with any scheme or
schemes of voluntary retirement or in the case of a public sector
company referred to in sub-clause (i) of clause (10C) of section 10,
a scheme of voluntary separation, if an exemption in respect of any
amount received or receivable on such voluntary retirement or
termination of his service or voluntary separation has been claimed by
the assessee under clause (10C) of section 10 in respect of such, or any other, assessment year.
