# Relief under section 89(1) for arrears of salary With Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from F.Y.2000-01 to F.Y. 2019-20 in Excel

Did you receive any advance salary or arrears of salary?**Therefore**, If yes, you might be worried about the tax implications of the same. Do I have to pay taxes on the total amount? What about the tax calculations of the previous year and so on? Taxpayers who have such questions in their mind, here is all that you need to know.

**In other words**, by now, you would have already figured out that Tax Act ensures there is parity in the income tax slab rates, and thus, when a portion of the income received does not pertain to the current year, a relief is granted so that the taxable income does not increase.

# Download Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the F.Y. 2000-01 to F.Y. 2019-20

To ensure that you are not burdened with paying additional taxes, the income tax department provides Relief U/s 89(1). **For instance**, If you receive any pension or payments for the previous year, you will not be taxed on the total amount for the current year. Essentially keeping you away from paying extra taxes, because there was a delay in payment.

**Similarly**, to avail the benefits under Section 89(1) you would need to submit Form 10E. What is Form 10E would be the most obvious question. The details of Form 10E, along with how and why to submit the same is provided in detail below.

## What is relief under section 89(1)?

When the taxpayer receives:

1. Arrears of salary or

2. Advance salary or

3. Arrears of family pension

then such amount is taxable in the Financial Year in which it is received.

However, relief under section 89(1) is provided to reduce additional tax burden due to delay in receiving such income.

## **Above all**, How to calculate relief under section 89(1)?

Here are the steps to calculate relief under section 89(1) of Income Tax Act, 1961:

1. Calculate tax payable on total income including arrears in the year in which it is received.

2. Calculate tax payable on total income excluding arrears in the year in which it is received.

3. Calculate difference between (1) and (2).

4. Calculate tax payable on total income of the year to which arrears are related, including arrears.

5. Calculate tax payable on total income of the year to which arrears are related, excluding arrears.

6. Calculate difference between (4) and (5).

7. The amount of relief will be the excess amount of (3) over (6). No relief shall be allowed if the amount of (6) is more than the amount in (3).

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## **In addition**, Example on how to calculate relief under section 89(1)

Mr. A has total income of Rs. 6,00,000/- for Financial Year 2017-18 (Assessment Year 2018-19) and received arrears of Rs. 1,50,000/- for Financial Year 2011-12 (Assessment Year 2012-13). The total income for Financial Year 2011-12 is Rs. 2,00,000/-.

**After that**, the relief will be calculated as follows:

1. Tax on total income of Rs. 7,50,000/- (Rs. 6,00,000+Rs. 1,50,000) including arrears for F.Y. 2017-18 is Rs. 64,375/- (as per rates applicable for F.Y. 2017-18 i.e. A.Y. 2018-19).

2. Tax on total income of Rs. 6,00,000/- excluding arrears for F.Y. 2016-17 is Rs. 33,475/-

3. Difference between (1) and (2) is Rs. 30,900/- (as per rates applicable for F.Y. 2017-18 i.e. A.Y. 2018-19).

4. Tax on total income of Rs. 3,50,000/- (Rs. 2,00,000+Rs. 1,50,000) including arrears for F.Y. 2011-12 is Rs. 17,510/- (as per rates applicable for F.Y. 2011-12 i.e A.Y. 2012-13).

5. Tax on total income of Rs. 2,00,000/- excluding arrears for F.Y. 2011-12 is Rs. 2,060/- (as per rates applicable for F.Y. 2011-12 i.e A.Y. 2012-13).

6. Difference between (4) and (5) is 15,450/-

7. The amount of relief will be Rs. 15,450/- [excess amount of (3) over (6)]