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7th Pay Commission Arrears Income Tax Relief Calculator 2016-17 based on Income Tax Relief under Section 89 for arrears of pay pertains previous years
7th Pay Commission Arrears Income Tax Relief Calculator As per Section 89 of Income Tax Act, Salaried Employees / Pensioner are entitled to claim Income Tax relief in respect of Arrears of Pay, Pension and Family Pension by accounting these receipts in the relevant years in which the portion of arrears were due.
This provision was very much handy when 6th Pay commission report was implemented and employees were paid pay arrears pertaining to the period from January 2006 in 2008 in two installments. We hope many Senior Central Government Employees would remember, online tool provided by GConnect in 2009 for calculating Income Tax relief in respect of 6th Pay Commission pay arrears was very much useful.
Who would be benefited out of Income Tax Relief under Section 89 this time?
Implementation of 7th Pay Commission does not involve huge pay arrears as compared to 6th pay commission. However, considerable Income Tax Relief is available for many employees who are liable to pay Income tax in 20% tax bracket for the income over and above Rs. 5 lakh.
This tool will be mainly Useful for Employees who were paying Tax in following pattern, as they get income tax relief for 7th Pay Commission Arrears of Pay due to lesser tax payable in the previous year compared to current year as a result of difference in Tax Rate in which 7th CPC pay arrears is subjected to Tax.
1. Employees who were paying Tax in 10% Tax Bracket in 2015-16 and are liable to pay income Tax in 20% bracket in 2016-17 for salary of over and above Rs. 5 lakh, and
2. Employees who were paying tax and 10% and 20% tax bracket in 2015-16 and liable to pay income Tax in 30% bracket in 2016-17 for salary of over and above Rs. 10 lakh.
1. An Employee was paying Income tax in 10% bracket in the year 2015-16 as his total taxable income in 2015-16 was Rs. 4,00,000.
2. After implementation of 7th Pay Commission, his total Taxable Income is Rs. 4,95,000/- (including the portion of arrears of 7th pay Commission pay pertains to the months March, April, May, June and July 2016).
3. He has received an Arrears of Rs. 42,000/- 7th pay Commission Pay pertains to period from January 2016 to July 2016, out which pay arrears of Rs 12,000/- was pertaining to the pay arrears for the months of January 2016 and February 2016.
Income Tax Relief:
On entering the above values, the employee concerned can claim Rs. 5871/- as Income Tax Relief under Form 10E and submit the same to this employer.