If you received arrears of salary/pension in the previous financial year 2020-21, your tax liability will be higher due to arrears; did you know that you can double your income from arrears? You can get relief on the relevant year and 89 (1) of the Income-tax Act, 1961.

 

We have prepared a small Excel calculator which will be helpful to calculate the relief under 89 (1) with Form 10E for the buckets received in F|Y 2020-21 and the arrears are related to the oldest till the financial year 2000-01.

 

How it works

 

This calculator shows two calculations of income tax, one is a tax on the basis of salary / arrears and the other is a tax on the basis of relevant years and if the tax on the basis of receipts is higher on the basis of the relevant year, relief will be available under Section 89 (1) not available means there is no benefit in the distribution of arrears in the respective years.

 

How to use it?

Note / FAQ about calculator usage you only need to fill in the white Cell. All colour cells are only necessary which is not mandatory to fill. Fill in the blanks where no figure is required for men and for women and for Senior Citizens.

 

You must select the status each year. Ensure that the position is correctly selected. Fill in the total income with arrears including all other incomes and the arrears from  the Financial Year 2000-21 to the Financial Year 2020-21 under the relevant year after all exemptions like Section 80C, 80CC, 80D, 80G, 80U etc. Fill out.

 

The total will appear automatically under the 2020-21 financial year. The arrears column (C-11) 2020-21 of the accounts under the financial year is secured and cannot be edited. (C-10 of the calculation sheet) not included for inclusion. The result is that if the total is A> Total B, relief will be shown under Section 89 (1), otherwise 0 will be displayed. Form 10E with the next relevant attachment will also be filled automatically along with Table-1 in the Form 10E

Download Automated Income Tax Arrears Relief Calculator U/s89 (1) with Form 10E from the Financial Year 2000-01 to the Financial Year2020-21

 

On March 11, 2021 by www.taxexcel.net

Share It

No Comments

Read More

Meaning Of Arrear of Salary

If Any Part of the basic salary which was not due and taxable in the earlier year but it is received during the previous year than it is called Arrears of salary

On March 12, 2018 by www.taxexcel.net

Share It

No Comments

Read More

It appears that the most of the salaried persons got the salary amount from the previous Financial Year, and after got the arrears Salary the Income have raised in this Financial Year. But this amount which you have got this Financial year as Salary Income, this amount not for this Financial Year earning and this is not liable to pay the Tax in this Financial Year, as this amount received from the financial year.

On February 19, 2018 by www.taxexcel.net

Share It

No Comments

Read More

It appears that the most of the salaried persons got the salary amount from the previous Financial Year , and after got the arrears Salary the Income have raised in this Financial Year. But this amount which you have got this Financial year as Salary Income, this amount not for this Financial Year earning and this is not liable to paid the Tax in this Financial Year , as this amount received from the financial year.

On January 25, 2018 by www.taxexcel.net

Share It

No Comments

Read More

Usually salary income is chargeable to tax either on due basis or on receipt basis. For the purpose of changeability salary consist of;

On May 31, 2016 by www.taxexcel.net

Share It

No Comments

Read More

Some Simple Steps to use  Income Tax Relief Calculator U/s 89(1) with Form 10E:

1. Divide the Arrears amount you have received in the year 2013-14 in to parts and enter those in  IT Relief Calculator in the relevant years in which those were actually due. 

Download Arrears Relief Calculator + 10E with Income Tax Calculator From the Financial Year 2000-01 to Financial Year 2015-16

 This division of Arrears in to parts can be easily made by Calculating the year wise total of the arrears amount using Pay due & drawn statement supplied to you while paying Pay arrears. For example, if an employee has received an arrears amount in the year 2014-15, being the unpaid pay for the period from March 2000 to Feb 2015, the same has to be distributed as pay arrears relevant to the years 2001-02, 2009-10, 2010-11, 2011-12 and 2014-15. The other fields for arrears in the years 2005-06, 2006-07, and 2007-08 in this case have to be entered with zeros as no arrears are due in these years.

2. Keep the copies of your IT Returns / Form 16 for the years from which the arrears is due. If your arrears is due from the year April 2007 to Feb-2011, copies of IT Returns from the financial years 2007-08, 2008-09, 2009-10, 2010-11 will be required for making entries in the  IT relief Calculator as well as for submission to your employer along with Form 10 E. 

The fields provided for other financial years in this case , i.e 2005-06, 2006-07, and 2007-08 can either be filled up with Net taxable income for that year or with zeros. Net Taxable income refers to Income based on which Income Tax for the year is calculated i.e Net income after all regular deductions and exemptions etc. For the sake of many of readers who are raising the doubt that whether any other arrears received in the previous years has to be shown for calculating IT relief for this year, we clarify that since you are taking net taxable income as per ITR it will be inclusive any other arrears amount received in the previous years.

3. Also, enter the income tax relief amount under section 89 deducted/availed by you during the previous years if any (2008-09, 2009-10, 2010-11, 2011-12, and 2012-13) in the relevant fields provided for this purpose in.

As a result, this income tax relief Tool for the year 2013-14 will Calculate your exact income tax liability during these years after deducting income tax relief availed by you.

4. While entering the taxable income for the current year 2013-14, exclude the total arrears received by you this year (2013-14), for which relief under Section 89(1) is intended to be claimed this year.

This is because the tool automatically take into account the break-up of arrears entered you in the relevant field provided in the tool From the Financial  Year 2000-01 to up to date Financial Year 2014-15

5. Now all mandatory entry work is over. Fill up your Name, PAN, Address etc as these relevant details in Form 10 E. Finally, Click the “Calculate Relief” Button. The tool would calculate the Income Tax Relief available to you if any in the field named as “Relief under Section 89 [B-A]“. Then Click “Generate Statement of Relief to be produced to IT – Form 10 E”. Now the prescribed Form-10E Statement will be generated for the Income Tax Relief Claimed. This statement has to be submitted to your employer along with copies of previous years Form 16 or IT returns.

How Income tax relief under Section 89 is calculated?

• This tool calculates income tax to be paid for the relevant previous by distributing the arrears to the relevant years.
• Then summation of this income tax is compared with the income tax that is to be payable for the income in 2013-14 after including the entire arrears received during this year.
• If the total income tax payable in the previous years after including the distributed arrears is lesser than the income tax payable for the income of current year (2013-14) after including entire arrears during this year. The difference between both of these figures is allowed as Income tax relief under Section 89 of Income Tax Act.
• If this distribution did not result in the lesser payment of income tax for the previous years, no income tax relief is available.

The following are relevant Sections and Rules for claiming Income Tax Relief for the Arrears of Salary Income

Section 89 of IT Act

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 89A, 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 prescribed

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

Rule 21A of IT Rules

Relief when salary is paid in arrears or in advance, etc.

21A.   (1) Where, by reason of any portion of an assessee’s salary being paid in arrears or in advance or, by reason of any portion of family pension received by an assessee being paid in arrears or, by reason of his having received in any one financial year 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, his income is assessed at a rate higher than that at which it would otherwise have been assessed, the relief to be granted under sub-section (1) of section 89 shall be—

          (a)  where any portion of the assessee’s salary is received in arrears or in advance or, any portion of family pension is received by an assessee in arrears, in accordance with the provisions of sub-rule (2);

(b)  where the payment is in the nature of gratuity in respect of past services of the assessee extending over a period of not less than five years, in accordance with the provisions of sub-rule (3);

          (c)  where the payment is in the nature of compensation received by the assessee from his employer or former employer at or in connection with the termination of his employment after continuous service for not less than three years and where the unexpired portion of his term of employment is also not less than three years, in accordance with the provisions of sub-rule (4);

          (d)  where the payment is in commutation of pension, in accordance with the provisions of sub-rule (5); and

          (e)  where the payment is not in the nature of salary paid in arrears or in advance or gratuity in respect of past services or compensation received at or in connection with the termination of employment or in commutation of pension, in accordance with the provisions of sub-rule (6).

(2)(a) In a case referred to in clause (a) of sub-rule (1), the tax payable by the assessee on his total income of the previous year in which the salary is received in arrears or in advance or, in which the family pension is received in arrears (such salary or family pension being hereafter in this sub-rule referred to respectively as the additional salary or additional family pension, as the case may be, and such previous year being hereafter in this sub-rule referred to as the relevant previous year) shall be reduced by the amount, if any, by which the tax on the additional salary or additional family pension, calculated in the manner specified in clause (b), exceeds the tax or the aggregate tax on the additional salary or additional family pension, calculated in the manner specified in clause (c) or clause (d), as the case may be.

(b) Tax shall be calculated on the total income of the relevant previous year as reduced by the additional salary or additional family pension, as the case may be, as if the total income so reduced were the total income of the assessee, and the amount by which the tax so calculated falls short of the tax on the total income before such reduction shall, for the purposes of clause (a), be taken to be the tax on the additional salary or additional family pension, under this clause.

(c) Where the additional salary or additional family pension, as the case may be, relates to only one previous year, tax shall be calculated on the total income of the said previous year as increased by the additional salary or additional family pension, as if the total income so increased were the total income of the assessee, and the amount by which the tax so calculated exceeds the tax payable by the assessee in respect of the total income of the said previous year shall, for the purposes of clause (a), be taken to be the tax on the additional salary or additional family pension, under this clause.

(d) Where the additional salary or additional family pension, as the case may be, relates to more than one previous year,—

           (i)  the previous years to which the additional salary or additional family pension relates and the amount relating to each such previous year shall first be ascertained;

          (ii)  tax shall, then, be calculated on the total income of each such previous year as increased by the amount relating to such previous year ascertained under sub-clause (i); as if the total income so increased were the total income of that previous year, and the amount by which the aggregate amount of tax in respect of the aforesaid previous years as calculated under sub-clause (ii) exceeds the aggregate amount of tax payable by the assessee in respect of the total income of the said previous years shall, for the purposes of clause (a), be taken to be the aggregate tax on the additional salary or additional family pension, under this clause.]

(3)  (a) In a case referred to in clause (b) of sub-rule (1), the tax payable by the  assessee on his total income of the previous year in which the payment by way of gratuity is received (such previous year being hereafter in this sub-rule referred to as the relevant previous year) shall be reduced by the amount, if any, by which the tax on the amount of the gratuity included in the total income of the relevant previous year, calculated at the average rate of tax applicable to such total income, exceeds the tax on the amount of such gratuity, calculated at the rate of tax determined under clause (b) or, as the case may be, clause (c).

(b) Where the payment by way of gratuity is made in respect of past services of the assessee extending over a period of not less than five years but less than fifteen years,—

           (i)  the total income of the assessee in respect of each of the two previous years immediately preceding the relevant previous year shall be  increased by an amount equal to one-half of the amount of the gratuity included in the total income of the relevant previous year, and the average rate of tax for each of the said two previous years shall be calculated as if the total income so increased were the total income of that previous year; and

          (ii)  the average of the average rates of tax for the two previous years immediately preceding the relevant previous year, calculated in accordance with sub-clause (i), shall, for the purposes of clause (a), be the rate of tax determined under this clause.

(c) Where the payment by way of gratuity is made in respect of past services of the assessee extending over a period of not less than fifteen years,—

           (i)  the total income of the assessee in respect of each of the three previous years immediately preceding the relevant previous year shall be increased by an amount equal to one-third  of the amount of the gratuity included in the total income of the relevant previous year, and the average rate of tax for each of the said three previous years shall be calculated as if the total income so increased were the total income of that previous year; and

          (ii)  the average of the average rates of tax for the three previous years immediately preceding the relevant previous year, calculated in accordance with sub-clause (i), shall, for the purposes of clause (a), be the rate of tax determined under this clause.

(4)  (a)  In a case referred to in clause (c) of sub-rule (1), the tax payable by the assessee on his total income of the previous year in which the payment by way of compensation is received (such previous year being hereafter in this sub-rule referred to as the relevant previous year) shall be reduced by the amount, if any, by which the tax on the amount of the compensation included in the total income of the relevant previous year, calculated at the average rate of tax applicable to such total income, exceeds the tax on the amount of such compensation, calculated at the rate of tax determined under clause (b).

(b) The total income of the assessee in respect of each of the three previous years immediately preceding the relevant previous year shall be increased by an amount equal to one-third of the amount of the compensation included in the total income of the relevant previous year, and the average rate of tax for each of the said three previous years shall be calculated as if the total income so increased were the total income of that previous year; and the average of the average rates of tax so calculated for the three previous years shall, for the purposes of clause (a), be the rate of tax determined under this clause.

(5)  (a)  In a case referred to in clause (d) of sub-rule (1), the tax payable by the assessee on his total income of the previous year in which the payment in commutation of pension is received (such previous year being hereafter in this sub-rule referred to as the relevant previous year) shall be reduced by the amount, if any, by which the tax on the payment in commutation of pension included in the total income of the relevant previous year, calculated at the average rate of tax applicable to such total income, exceeds the tax on the amount of such payment, calculated at the rate of tax determined under clause (b).

(b) The total income of the assessee in respect of each of the three previous years immediately preceding the relevant previous year shall be increased by an amount equal to one-third of the amount of payment in commutation of pension included in the total income of the relevant previous year, and the average rate of tax for each of the said three previous years shall be calculated as if the total income so increased were the total income of that previous year; and the average of the average rates of tax so calculated for the three previous years shall, for the purposes of clause (a), be the rate of tax determined under this clause.

(6) In a case referred to in clause (e) of sub-rule (1), the Board may, having regard to the circumstances of the case, allow such relief as it deems fit.

Provision for Form 10 E

Furnishing of particulars for claiming relief under section 89(1).

21AA.  Where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body], is entitled to relief under sub-section (1) of section 89, he may furnish to the person responsible for making the payment referred to in sub-section (1) of section 192, the particulars specified in Form No. 10E.

On January 30, 2016 by www.taxexcel.net

Share It

No Comments

Read More

Click here to Download Income Tax Arrears Relief Calculator with form 10E

It appears that the most of the salaried persons are got the salary amount from the previous Financial Year , and after got the arrears Salary the Income have raised in this Financial Year. But this amount which you have got this Financial year as Salary Income, this amount not for this Financial Year earning and this is not liable to paid the Tax in this Financial Year , as this amount received from the financial year.

As per the Income Tax Act 1961 the Income Tax Section 89(1) can get Arrears Relief relevant to the previous years earning. This Section too much prominent from the 6^th Pay Commission of Central and State Employees Arrears amount received. Previously this Section was introduce to the Tax payers only for the get the Relief From the Gratuity as this Section also can get relief the Arrears of Gratuity amount for the Pensioners.

Now it is another question that most of the employees have not concept about how to calculate the Arrears Relief or how to bifurcate the income. In this Section 89(1) it is calculate as per the Standard Deduction for the same financial year, if the Arrears Salary Received with Arrears Received amount cross the limit of the same financial year’s Standard Deduction, then he can not get the Relief. For an Example :- Mr. A,  received the Arrears Salary for the financial year 2012-13 Rs. 20,000/- in the financial Year 2013-14 and the Total Salary Income was Rs.1,50,000/- for the Financial Year 2013-14, then his Total Salary Income will be Rs. 20,000/- + 1,50,000/- = 1,70,000/- and the Standard Deduction is Rs. 2,00,000/-. Hence the Total Income below the Standard Deduction, and you can get the Arrears Relief for the Financial 3013-14, But if the Income is over Rs. 2,00,000/- than you can not get the Relief.

If you have received arrears of salary in Financial year 2014-15 or previous any years  related to previous years then your tax liability will be on higher side due to arrears but do you know that you can bifurcate your income  from arrears in respective years on notional basis and can avail relief u/s 89(1) of Income tax Act 1961.

This small excel calculator with the Automated Form 10E which will be helpful in calculate the relief under 89(1) for arrears received in financial year 2014-15 or any previous years  up to financial year 2000-01. This Excel Based Software can prepare and Calculate your Arrears Relief with Form 10E.

Main Feature of this Utility:-

• This Excel Utility Can Calculate your Arrears Relief just a moment
• This Calculator can prepare also the Annex Form 10E
• Easy to Generate and easy to install in any System
• Who can operate this utility
• This Utility can Calculate Since the Financial Year 2000-01 to FY 2014-15
• The Standard Deduction have also have in this utility you can view the Slab 

Click here to Download Income Tax Arrears Relief Calculator with form 10E

On July 15, 2014 by www.taxexcel.net

Share It

No Comments

Read More