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guhan   30 March 2020

Taxation

Sir, I am a tamilnadu state government pensioner. I retired from service on 30.9.2008. Under Ordes of court,i was paid arrears of pay and allowances of Rs.708204 on 12.4.2019. the arrear amount relates to the period from 25.2.2000 to 30.9.2008. Kindly let me know what will be the quantum of tax relief available to me under section 89 of the IT act 1961 read with rule 21 a.


 1 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     30 March 2020

Step 1: Calculate tax payable on the total income, including additional salary – in the year it is received.

 

Step 2: Calculate tax payable on the total income, excluding additional salary in the year it is received. You can get the amount of the additional salary (Arrears) from the arrear document given by your employer.

Now you have to subtract the arrear from the total salary received (including the arrears), which can be taken from your Form 16.

After knowing the amount after arrear, you need to calculate the tax over the same.

Step 3: Calculate the difference between Step 1 and Step 2.

Step 4: Calculate tax payable on the total income of the year to which the arrears relate, excluding arrears.

Step 5: Calculate tax payable on the total income of the year to which the arrears relate, including arrears

Step 6: Calculate the difference between Step 4 and Step 5.

Step 7: Excess of amount at Step 3 over Step 6 is the tax relief that shall be allowed.

If the amount in Step 6 is more than the amount in Step 3 no relief shall be allowed.

Alternatively, you may follow the steps on the income tax website to calculate the tax the arrears.

Once you have calculated this amount you can enter the values on ClearTax and proceed to file your return.


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