PDA

View Full Version : pay arrears - income tax



gadini
19-09-2008, 09:53 PM
TDS will be made on the 40% first instalment or the full 100% of arrears?

if it is for the 40%, then

relief u/s 89(1) for arrears
- whether the 40% instalment is to be taken into account for the first applicable year, then to the second year and finally to the third year
or
apportioned between the 3 financial years equally ?

REX88
19-09-2008, 11:37 PM
TDS will be made on the 40% first instalment or the full 100% of arrears?

My understanding is that since salary is taxable on acrual basis & the employee is liable for the entire 100% of arrears , whether received or not [this year]
The DDO is liable only for the pay disbursed ie., 40% [this year]
It works out best if the entire 100% is spread to all the years 05-06 to 08-09 claiming relief under Sec89 of the IT Act, by filing form 10E available in the IT website.- REX

shri75
20-09-2008, 07:22 AM
what ever the condition may be, the amount recieved in financial year is taxable and not what not recieved.

ksvsmanian
22-09-2008, 01:55 PM
My understanding is that since salary is taxable on acrual basis & the employee is liable for the entire 100% of arrears , whether received or not [this year]
The DDO is liable only for the pay disbursed ie., 40% [this year]
It works out best if the entire 100% is spread to all the years 05-06 to 08-09 claiming relief under Sec89 of the IT Act, by filing form 10E available in the IT website.- REX

You have to submit a request letter to DDO and You can avail this relief U/S.89 by taking 40% of arrears to the particular previous years it originally belongs to and moreover, if you contribute GPF in Arrears and the GPF amount can also be deducted U/S 80 ,Chapter VI A (i.e.) any instrument upto 100000. For Details please visit www.ksvsmanian.synthasite.com for easy calculation.

gadini
30-09-2008, 10:21 PM
pl see CBDT's circular no.9 of 2008 dated 29th september 2008.

clarification :

income tax at source would be deducted u/s 192 only from the arrears
of salary actually paid during FY 2008-09

dinu
04-10-2008, 04:59 PM
Had the arrears been released based on period instead of percentage these confusion would have never arised. Release of first instalment to the extent of arrears upto February 2007 would have resulted in arrears of around only 42-45% and would have eased the burden of calculations for those who can avail benefit under sec 89(1)