TAX RELIEF ON SALARY ARRAERS / GRATUITY ARREARS
SECTION 89 OF INCOME TAX ACT
HOW TO SUBMIT FORM 10E ON-LINE ?
HOME ABOUT PERSONAL FINANCE FINANCIAL PLANNING INSURANCE LIFE INSURANCE HEALTH INSURANCE INVESTMENTS STOCKS MUTUAL FUNDS STOCK STRATEGIES IT RETURNS
HAPPY TO RECORD
www.plannprogress.com has crossed
500,000 PAGE VIEWS
THANK ALL READERS ,WELL WISHERS WHO HAVE HELPED US TO REACH THE MILESTONE
www.plannprogress.com has crossed
500,000 PAGE VIEWS
THANK ALL READERS ,WELL WISHERS WHO HAVE HELPED US TO REACH THE MILESTONE
TAX PLANNING FOR FY 2021-22 ( AY 2022-23 )
Comprehensive Article on Income tax changes in Rules, Rates , Slabs , Rebates and Estimation
CLICK HERE TO READ
CONTAINS 5 PARTS
PART I : HIGHLIGHTS OF CHANGES IN TAX RULES FOR FY 2021-22 , CLICK HERE
PART 2 : TAX RATES / SLABS FOR FY 2021-22 CLICK HERE
PART 3 : TAX REBATES FOR FY 21-22 CLICK HERE
PART 4: INCOME TAX CALCULATOR FOR FY 2021-22 CLICK HERE
PART 5 : TAX ON RETIREMENT BENEFITS CLICK HERE
FOR LATEST INCOME TAX NEWS CLICK HERE
HOW TO PAY INCOME TAX ONLINE ? CLICK HERE
INCOME TAX ON SALARY ARREARS - RELIEF UNDER SECTION 89 (1)
Submit Form 10e for income tax relief for salary arrears
In case you have received any salary arrears , gratuity , family pension or any other arrears pertaining to earlier years than FY 1921-22 , you may claim relief under section 89 (1 ) of IT Act . To claim such a relief , one has to submit Form 10E before submitting the IT Return for the year in which arrears are received . ( CLICK HERE TO PRINT FORM 10E ) You may also submit the form in Income Tax department's e-filing website by logging in to your account . Details you may see in the later section of this article .
The Tax relief will be calculated as per Rule 21A of the Income Tax Act
The Tax relief will be calculated as per Rule 21A of the Income Tax Act
89 Relief calculator
Calculate Tax Relief on Salary Arrears
HOW TO CALCULATE RELIEF ON TAX ARREARS UNDER SECTION 89 :
Let us assume that you have received arrears in Financial year 2021-22 . The arrears pertain to salaries of FY 18-19, 19-20 , 20-21 , 21-22 Then
1. Calculate Income tax on salary with arrears for the fy 2021-22 Say the income tax is A
2. Calculate Income tax on salary for the year fy 21-22 after reducing the arrears pertaining to fy 18-19,19-20 & 20-21 for the fy 2021-22 Say the income tax is B
3. The difference is extra tax payable by you for fy 2021-22 is C = A - B
4. Now note down the income tax already paid for earlier years with your income without arrears . Say you have paid Income tax D for fy 2018-19 , E for FY 19-20 & F for FY 20-21 . Total Tax paid earlier is D+ E+ F = H
5. Add the income arrears pertaining to each earlier years to your income reported and calculate taxes for each year and say the new tax payable is I for FY 2018-19 , J for fy 19-20 & K for FY 20-21 . Total tax payable now for earlier years is I+ J+ K = L
6. The additional tax payable on account of arrears for previous years is M = L- H
Now under rule 21A , you can chose either C or M whichever is beneficial to you . That means either you can pay total tax of A or
B+ M whichever is beneficial .
For calculating the Income tax for various years , you may go to our page INCOME TAX CALCULATOR FOR FY 21-22
To calculate the Tax relief , you can use the tool provided by IT Department by CLICKING HERE
TAX RELIEF ON GRATUITY ARREARS
One can get Income tax relief under section 89 (1 ) of Income tax for arrears one get on the Gratuity paid by the employer .
Method of Calculation of TAX RELIEF for Gratuity Arrears :
( In case total service completed is more than 15 years )
1 Calculate Income tax on salary with gratuity arrears for the fy 2021-22 Say the income tax is A
2. Calculate the average rate of tax for the year Fy 2021-22 (Total Tax/Total Income)multiplied by 100 ) say P
3. Calculate tax on gratuity amount received on the basis of the average rate ( P ) of the tax that is computed in step 2. Say amount is Q
4. Add 1/3 of Gratuity amount each to the incomes of Fy 18-19 , fy 19-20 & Fy 20-21
.5 Calculate the tax for each year after adding 1/3 each of gratuity received and calculate the tax rate for each of the three years . Sa y income tax rates are R, S ,& T for the years Fy 18-19 , fy 19-20 & Fy 20-21 respectively .
6. Calculate average of R, S & T ie R+S+T / 3 = U
7. Calculate tax on gratuity amount received on the basis of the average rate ( U ) of the tax . Say amount is V
8 Tax relief you can claim on Gratuity is Q- V = W
If completed service is between 5 years to 15 years , average of two preceding years only to be taken and less than 5 years , no relief is available .
To calculate the Tax relief , you can use the tool provided by IT Department by CLICKING HERE
Method of Calculation of TAX RELIEF for Gratuity Arrears :
( In case total service completed is more than 15 years )
1 Calculate Income tax on salary with gratuity arrears for the fy 2021-22 Say the income tax is A
2. Calculate the average rate of tax for the year Fy 2021-22 (Total Tax/Total Income)multiplied by 100 ) say P
3. Calculate tax on gratuity amount received on the basis of the average rate ( P ) of the tax that is computed in step 2. Say amount is Q
4. Add 1/3 of Gratuity amount each to the incomes of Fy 18-19 , fy 19-20 & Fy 20-21
.5 Calculate the tax for each year after adding 1/3 each of gratuity received and calculate the tax rate for each of the three years . Sa y income tax rates are R, S ,& T for the years Fy 18-19 , fy 19-20 & Fy 20-21 respectively .
6. Calculate average of R, S & T ie R+S+T / 3 = U
7. Calculate tax on gratuity amount received on the basis of the average rate ( U ) of the tax . Say amount is V
8 Tax relief you can claim on Gratuity is Q- V = W
If completed service is between 5 years to 15 years , average of two preceding years only to be taken and less than 5 years , no relief is available .
To calculate the Tax relief , you can use the tool provided by IT Department by CLICKING HERE
STEP BY STEP GUIDE TO SUBMIT 10E FORM ON-LINE
HOW TO SUBMIT FORM 10 ( E ) TO IT DEPARTMENT ON-LINE ?
How to submit Form 10E online ?
1. Go to New Income Tax e-Filing website
2. Login using your PAN Number and PASSWORD .
3. Go to E-file and click on Income tax Forms
4. In the next screen , click on " File Income Tax Forms "
5. Select " Persons without Business / professional income "
6. In the new screen , Select Form 10E
7. in " Form for claiming relief under section 89 [Form No. 10E]
6. Choose the Assessment Year as 2022-23 and Continue
7. Next screen , click on " Let's get started "
8.Click on the all the relevant arrears you have received during the year .
9. After filling in the details in each section where you have received arrears , click " Preview "
10 . On completion of preview , click on " Proceed to e-verify "
11. After successful e-verification , your screen will show " success "
Only on successful filing of 10E , you may file IT Returns and you can claim rebates under section 89 of Income Tax Act for the salary / pension / gratuity arrears you have received .
For step by step guidance for filing ITR1- Sahaj for FY 2021-22 , CLICK HERE
For step by step guidance for filing ITR2 for FY 2021-22 , CLICK HERE
To know how to down load Form 26as , CLICK HERE
How to submit Form 10E online ?
1. Go to New Income Tax e-Filing website
2. Login using your PAN Number and PASSWORD .
3. Go to E-file and click on Income tax Forms
4. In the next screen , click on " File Income Tax Forms "
5. Select " Persons without Business / professional income "
6. In the new screen , Select Form 10E
7. in " Form for claiming relief under section 89 [Form No. 10E]
6. Choose the Assessment Year as 2022-23 and Continue
7. Next screen , click on " Let's get started "
8.Click on the all the relevant arrears you have received during the year .
9. After filling in the details in each section where you have received arrears , click " Preview "
10 . On completion of preview , click on " Proceed to e-verify "
11. After successful e-verification , your screen will show " success "
Only on successful filing of 10E , you may file IT Returns and you can claim rebates under section 89 of Income Tax Act for the salary / pension / gratuity arrears you have received .
For step by step guidance for filing ITR1- Sahaj for FY 2021-22 , CLICK HERE
For step by step guidance for filing ITR2 for FY 2021-22 , CLICK HERE
To know how to down load Form 26as , CLICK HERE
What is Section 89 of Income Tax Act 1961 ?
Section 89 : 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, 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 prescribed93:
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.
89. Where an assessee is in receipt of a sum in the nature of salary, 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 prescribed93:
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.
For Tax on Retirement Benefits CLICK HERE
NEW ARTICLES ON
SMALL FINANCE BANKS PAYMENT BANKS
UNIFIED PAYMENT INTERFACE BHARAT BILL PAYMENT SYSTEM
BHIM APP AADHAR
e-INSURANCE Account ( eIA )
SMALL FINANCE BANKS PAYMENT BANKS
UNIFIED PAYMENT INTERFACE BHARAT BILL PAYMENT SYSTEM
BHIM APP AADHAR
e-INSURANCE Account ( eIA )
FOR AUTHENTIC INFORMATION AND TIPS ON INCOME TAX MATTERS
Income tax dept of Govt of India has a very useful portal which churns out valuable guidance for tax payers .One can go through and understand the basics .
Link to the portal is http://india.gov.in/spotlight/filing-income-tax-returns#itr2
Further there are practical tips for computing tax which can be read and used .For example, the link how to compute other income. One can make use of the portal in understanding law, making payment and also to file returns .
Link to the portal is http://india.gov.in/spotlight/filing-income-tax-returns#itr2
Further there are practical tips for computing tax which can be read and used .For example, the link how to compute other income. One can make use of the portal in understanding law, making payment and also to file returns .
