If you have received arrears of salary in Financial year 2015-16 related to previous years then your tax liability for Financial Year 2015-16 will be on higher side due to arrears received in current year but good news is that you can bifurcate your income from arrears in respective years on notional basis and can avail relief u/s 89(1) of Income tax Act , 1961.
We have prepared a small excel calculator which will be helpful in calculate the relief under 89(1) for arrears received in financial year 2015-16 and relates maximum older up to financial year 2005-06.
This calculator can be used on-line or can also be downloaded for offline use.
How it works
This calculator show two calculation of Income Tax ,one is on the basis of the receipt of salary/arrears and other is on the due basis of relevant years and if tax on receipt basis is more than due relevant years basis then relief under section 89(1) will be available otherwise nothing is available means no benefit in distributing the arrears in respective years.
How to Use.(online)
You have to fill only yellow column only .after each entry an updating sign will be shown,after disappearance of the sign then only enter next data.
All yellow cell are not mandatory fill only which are required.fill zero where no figures are required
- This calculator will not work if your Income includes Long term capital gain .
- The calculator will not work if your taxable income is more than one crore.
Section 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 prescribed
Specified DDO CAN ALLOW RELIEF U/s 89(1)
Following employer may allow benefit u/s 89(1) if claimed by employee for calculating the TDS.
6.association or body
7.Govt State or center
8.Public sector undertaking