What is Arrears of Salary?
An employee may get the past year/s salary in the current year. This may be due to revision of salary from past year/s or may be due to restructuring of salary from past year/s or may be due to any other reason.
The Arrears of Salary (past dues) are received in the current year along with the current period’s salary.
For example, An employee receives the normal salary of Rs. 12 lakhs for the year 2020-21. And also receive salary of Rs. 1.60 lakhs say, for the past 4 years. In such case the entire receipts of Rs. 13.60 lakhs for the year 2020-21 (AY 2021-22). Which will be relative at the highest rate of Tax. Had the arrears been received in past years, those would have taxed at lower rates than present year tax rates.
Considering the same facts, Section 89(1) of the Income Tax Act, gives Relief to taxpayers from current year tax.
Click the below link to download the excel calculator to calculate the relief available FY 2020-21.
How does the relief under section 89(1) gets calculated?
The calculations are done in Form 10E, which comprise ‘Table A’ and ‘Annexure-I’ therein.
Table A calculates the tax on salary in each of past years, it relates.
For 10E gives the details of Arrears of Salary received in the current Financial Year.
Annexure-I calculates the relief available to taxpayers (refer to the free downloaded excel calculator).
Please click here to read the detailed text, process of claiming in Income Tax Portal, etc.
Click here to download the relief calculator FY 2019-20.
