View Full Version : Tax Relief clarification

31-12-2008, 06:46 PM
hi to all
Advance New Year 2009 Wishes to all our friends.
My Question is
1) One Govt. Servant already calculate his income AY-06-07, 07-08, 08-09
whether he is tax payer or not. If he is a tax payer he will calculate his income for that particular year (i.e AY 06-07, 07-08, 08-09) it is past.

Now again asking you that is Income Tax calculation for that particular year only. Now I got 40% Arrear as per 6CPC. for this FY (from Mar08 to Feb-09)
It includes Tax.

BUT Relief U/S.89 when salary is paid in arrears or in advance, etc If I Split my 40% Arrear amount to that particular years than Sure I will get Income Tax relief or not?

Another point is If I already paid Tax, then I can use relief U/s.89 format for relief
If I have NIL Statement for that particular AY than can I use relief?

Normally in AY 06-07, 07-08 and 08-09 years I have some calculations to reduce Tax for that particular year. But after 3 years later I am getting my 40% or 60% arrear. Due to this i will became tax payer. But as per tax rules only tax calculated for that particular year. Then how it is possible to add my 40% arrear to previous years? I dont now this rule.

Pls clarify indetails


01-01-2009, 02:22 PM
Dear friend,
For calculating amount of relief, just add the arrear amount pertaining to 2006-07 in the total taxable income for the year 2006-07 and work out the revised tax. Compute the amount of increase in tax liability for the year 2006-07 due to addition of arrears. Now, calculate income tax for the year 2008-09 by excluding the total amount of arrears received during the year 2008-09.Work out the decrease in tax liability for 2008-09 due to this reduction. Now, the difference between the above two amounts (i.e., increase in 2006-07 & decrease in 2008-09) is the amount of tax relief to be claimed. Similarly, you have to calculate for 2007-08 also.
But, you have to pay tax on total arrear now in 2008-09. You can claim relief only after that as per Sec 89(1) of the Income Tax Act, 1961.

01-01-2009, 05:52 PM
thank u sir for your clarification. like that New recruits after january2006 also having problem in this relief.
(i,e) they are paying NPS 10% now they received 40% Arrear deducted with 10%NPS amount but as per rule they must only deduct their 4% for this fiscal and 6% to next. Any how after getting this arrear if any provision to deduct u/s 80CCD instead of below 1lakh savings.
pls clarify sir


01-01-2009, 06:14 PM
Sir Again I have doubt (i.e) when calculating Relief. How to add the 40% arrear?

1) in Jan-06 and Feb-06 two months difference = Rs. 4608+4608=9216
in this amount can I take 40% of the amount= 3687? or full amount?
because we are not getting full arrears in this fiscal.
if it is logic or under Rule?

2) Another Question New recruitment after 01-01-2006
for example november 30 (2006) appointed. But now he is getting arrear
40% from november 2006 onwards. Normally he not paid any tax for
december, January and February - 06 it is another benefit to them. If
anyone wants to get relief to split their 3 months salary (Dec,Jan,Feb06)
arrear to next years.(FY 2006-07).or in thier Savings.

I think this is also benfit to New recruits??

02-01-2009, 07:26 AM
For your Recent queries:

Query 1:
Tax has to be paid only on the 40% of gross arrears we have actually received. This is applicable for all the years (i.e) 2005-06, 2006-07, 2007-08 and 2008-09.

For Detailed section 89 relief calculation check this link - Income Tax relief under Section 89(1) (http://gconnect.in/gc/service/personal-income-tax/income-tax-relief-for-6cpc-arrears-under-section-891.html)

Query 2:
The arrears received by your friend for the months Dec-06, Jan-07 and Feb-07 can be shown as income in the financial year 2006-07, so that he will get maximum benefit out of Section 89 relief provision.

03-01-2009, 10:45 PM
ref: comment no: 2 above:

There is no need to wait for this assessment year to conclude for one to resort to Section 89. The GC statement of sec.89 can be used and tax benefits can be utilised now itself, the year you got the arrears, including a part pertaining to current year.