Calculate Income tax relief for Arrears of pay received in the year 2011-12
We launched an online calculator for estimating the Income Tax rebate under Section 89(1) for the arrears of pay and allowance received by an employee in the year 2009 as we thought that it will be very useful for GConnect readers on account of implementation of sixth pay commission which involved payment of arrears to many of Government employees.
This year we thought of discontinuing this tool as payment of arrears on account of 6cpc implementation would have been over by this time.
However, many GConnect readers demanded that receipt of arrears of pay and allowances pertaining to previous years is regular phenomenon in Government service on account of MACP, promotion etc as pay fixation may be given with retrospective effect in such situations.
So, we have updated this online tool for calculating Income tax relief under Section 89(1) of IT Act for the arrears of pay and allowances received by a salaried employee during the year 2011-12.
Following points may be kept in mind while making entry in this Income Tax relief tool:
Tips to use the tool:
- While making entry for the financial year 2008-09, 2009-10 and 2010-11, include the total arrears received by you during these previous years in the taxable income of relevant years. In other words, the net taxable income provided in your ITR return/form-16 in the relevant year is to be entered.
- Also, enter the income tax relief under section 89 (1) deducted/availed by you during these two years (2008-09, 2009-10 and 2010-11) for the arrears received by you in these three years, in the relevant fields provided for this purpose. As a result, this income tax relief Tool for the year 2011-12 will calculate your exact income tax liablity during these years after deducting income tax relief availed by you.
- While entering the taxable income for the current year 2011-12, exclude the total arrears received by you this year (2011-12), for which relief under Section 89(1) is intended to be claimed this year. This is because the tool automatically add the break-up of arrears entered you in the relevant field provided in the tool against the year 2005-06, 2006-07, 2007-08, 2008-09,2009-10, 2010-11, with the income entered by you for the year 2011-12.
- If income tax relief or the arrears received by you for a particular year is Nil, ensure that 0 (numerical zero) is entered in the relevant fields.
Who can use this tool?
This tool will be useful mainly for employees who have change in their pay and allowances with retrospective effect in the situations such as MACP (Modified Assured Career Progression), promotion etc. Such employees have a chance of getting income tax relief for the Pay and allowance arrears, which are actually relevant to the previous years.
How Income tax relief under Section 89(1) is calculated?
- This tool calculates income tax to be paid for the relevant previous by distributing the arrears to the relevant years.
- Then summation of this income tax is compared with the income tax that is to be payable for the income in 2011-12 after including the entire arrears received during this year.
- If the total income tax payable in the previous years after including the distributed arrears is lesser than the income tax payable for the income of current year (2011-12) after including entire arrears during this year. The difference between both of these figures is allowed as Income tax relief under Section 89(1) of Income Tax.
- If this distribution did not result in the lesser payment of income tax for the previous years, no income tax relief is available.
To check the relevant income tax provisions for the procedure to calculate relief under Section 89 (1) use the following links.
Income tax Department link for Section 89(1)
Income tax provisions for Form 10E
GConnect online tool to calculate income tax for the year 2010-11 (Assessment year 2011-12)
Provide your suggestions for the improvement of this online tool as comments to this article.
Sir,
I have availed Tax relief under Section 89(1) on the 6th pay commission arrears during Financial yr. 2009-10. Now during current FY 2011-12, I have again received arrears for the year 2005-06 & on wards due to my Pay re-fixation and cafeteria allowances allowed in Miniratna company. Please update tool for calculating Tax relief under Section 89(1) for the arrears received during FY 2011-12 pertaining to 2005-06 & onwards.
In Annexure I of Form 10E, for item no.6 and item.no.7, the figures displayed wrongly. The figure intended for item.no.7 should be displayed for item.no.6 and vice versa
we could find that the values in output columns were shown not in their original places, though the tool calculates correctly as you pointed out. We sorted out the same. Please go through the output sheet again and give your feedback. Thank you
dear sir,
I want to calculate my i.t. relief u/s89(1) form fy 1998-99 on ward , if you have link please provide me
Sir, Why 40% Arrears Amount is not taken / considered for AY 2006-07, 2007-08, 2008-09 in Net Taxable Income while it is considered for AY 2009-10 onwards. Please Reply
The tool takes in to account the relief already availed by an employee during the year 2008-09, 2009-10, and 2010-11 consequent on 6cpc implementation. If no relief already availed previously, the relevant fields can be entered with zero
Sir,
Even after entering the amount of the relief availed by me for the AY 2011-12 in the relevant field provided for that purpose, the income tax relief tool does not deduct the said amount. The amount of relief for the AY 2012-13 remains the same if the relevant field is left with the figure zero or the amount of the relief availed is entered in it. Why this happens?
If you are not getting any relief this year even by keeping the relief claimed last year as zero, then deduction of relief claimed last year will further reduce your relief available this year to negative. So there will not be any relief this year
sir im stategovt employee with salary Rs14000pm fixed with no deduction. i got arrears of fy2010-2011 Rs 30000/-in oct2011.my net income for FY2011-2012 including arrears is Rs 206000.I’v postal life insurance of Rs 10440 yearly.can i get rebate on tax. if so what is the procedure
If the arrears received by you is pertaining to the period from 2005-06, you can use this tool to calculate the IT relief on account of receipt of arrears.
Sir i have claimed relief of Rs. 1970/- under section 89(1) in F.Y 2010-11
that i have filled in the form given above
but whether i am filling that data or not the relief is coming the same why is it so can you tell me please
If the relief for this year is zero by even keeping the last year’s relief as zero then providing the details of last year’s relief will have no effect
Is form 10 E mandatory to be sent with e filed return?
No. Form 10E need not be attached
sir
very nice tool is this for arrear calculate thank for providing this tool
Is it necessary to take a prior permission of the income tax officer while splitting the arrears year=wise?
no it is not needed. submit forms under section 89
Do i need to send form 10E or submit revised return of earlier F.Y.
You have to form 10E to your employer, who would issue Form 16 incorporating the relief claimed