Section 89(1) deals with the arrears of the salary relating to past year which was received in the current year. An Individual can claim relief if the same arrear has been accounted in the past year and received in this year. We cannot claim the relief if the arrear has not been accounted in the past year
Relief under section 89 calculator for ay 2018-19
Step 1: Calculate tax payable on the income received in this year ( including any arrears received in this year )
Step 2: Calculate tax payable on the total income, excluding arrears salary in the year it is received.
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, including arrears.
Step 5: Calculate tax payable on the total income of the year to which the arrears relate, excluding arrears.
Step 6: Calculate the difference between Step 4 and Step 5.
Step 7: Excess of the 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.
Relief Under Section 89 With Example
praveen got the salary of 5 Lakhs for the financial year 2016-17 and received arrears salary (F.Y.2016-17) 50 thousand then the relief under section 89 is
Step-1
Calculation of Tax F.Y.2017-18
Total Gross Salary 5,00,000
Add: arrears Salary 50,000
—————
Total Taxable Income 5,50,000
Calculation of Tax payable on taxable income 23175/-
Step-2:
Total Gross Salary (Excluding arrears salary) 5,00,000
Tax payable on taxable income (Excluding arrears salary) 12875/-
Step-3: Difference between step-1 and step-2 (23175 – 12785 = 10300/-)
Step-4:
Calculation of Tax F.Y.2016-17
Total Gross Salary 4,50,000
Add: arrears Salary 50,000
—————
Total Taxable Income 5,00,000
Calculate tax payable on the total income of the year to which the arrears relate, excluding arrears. 20600/-
Step-5:
Total Gross Salary (Excluding arrears salary) 4,50,000
Calculate tax payable on the total income of the year to which the arrears relate, including arrears. 15450/-
Step-6: Difference between step-4 and step-5 tax (20600 – 15450 = 5150)
Step-7: Excess of the amount at Step 3 over Step 6 is the tax relief under section 89 amount is 5150/-
according to the under section 89 (1) you want to get the claim benefits then you must fill the form 10E in the e-filling portal
Also read: Download form 16 Excel format for ay 2020-21
Form 10e calculator ay 2018-19
Step-1:
- Login to e-filing in www.incometaxindiaefiling.gov.in with your user id and password.
- Now click on the Income Tax Forms option in E-File
- Now fill the details of Pan.No, Form Name, Assessment Year, & Submission Mode (Prepare and submit Online)
Step-2:
- You see the personal Details in Form 10E and file the residential status and go to the below drop-down list and select the Annexure 1 option for arrears salaries details purpose.
Step-3 :
- Fill the Salary Details in Annexure-1
- There are two types of tax calculation here one is your total income includes any past dues paid in the current year and the second one is the tax is calculated on your total income earned or received during the year.
- After filling all the details and click the submit button.
Step-4 :
- After submitting the Form 10E. go to dashboard and click the view returns/forms, select the other form option & click the submit button then you see the successfully submitted.
Sir I have got arrear of financial year 2016-2017 in year 2017-2018 so while filling form what should I fill as previous year and while selecting form 10 e what should I fill as assessment year
A.Y.2018-19