What is the method of computing relief regard to arrears of salary

What is the method of computing relief regard to arrears of salary
As per section 15 of the Income Tax Act, salary is taxable on receipt or due basis, whichever is earlier. 
In the following 2 cases salary is taxable on receipt basis 
• Salary received in advance. 
• Salary received in arrears. 
Arrears of salary is receiving salary pertaining to the previous years in the current year, which is not taxed earlier on due basis.

Taxability: -

It is always happy to receive arrears of salary. But it is then you start to feel bad when you have to pay tax on it, because you think that this year’s tax rate is higher when compared to year which the arrear relates to.But Income tax act has given you a deduction with regards to arrears of salary. 
As per section 89(1) of Income Tax Act, 1961 you can claim a deduction with regards to your arrears of salary. 
If you have received any advance or arrears of salary or arrears of pension you can claim deduction r a 
It will also reduce the TDS deductible on your salary.

Why relief is provided?

Where the employee’s salary is paid in arrears or in advance and he receives salary for more than 12 months in one financial year, or, he is in receipt of profit in lieu of salary U/s 17(3) of the IT act and due to the above reasons, his income is assessed at a rate higher than that at which it would otherwise have been assessed. In order to mitigate the hardship caused to the assessee, relief is provided u/s 89 of the IT Act, 1961 on certain types of receipts.

Form to be filed to get relief?

• The relief can be claimed by the employee by way of declaration in the prescribed Form 10E. 
• Such claim can be made to the employer at the time of making TDS. The employer is bound to consider the claim of relief while deducting TDS.

Method of computing relief U/s 89 with regard to arrears of salary?

Computation :- 
Step 1: - Calculate total income for the year (excluding arrears of salary, advance etc.) 
Step 2: - Add arrears of salary received. 
Step 3: - Total income including arrears. (step 1 + step 2). 
Step 4: - TAX on “total income including arrears” (after allowing rebate) 
Step 5: - Tax on “total income excluding arrears” (after allowing rebate) 
Step 6: - Difference between step 4 & step 5. 
Step 7: - Tax on arrears of salary If such salary had been received in the year to which they relate to. 
Step 8: - Relief U/s 89 [difference between step 6 & step 7]. 

Conclusion: - 
It is further provided that where an assessee claims exemption U/s 10(10C) for VRS compensation, he is not eligible for relief U/s 89(1). If assesse don’t file Form 10E while claiming relief, notice from income tax department will be served.

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