If you have received arrears of salary/pension in the Financial year 2019-20 related to the previous year(s) then your tax liability will be on the higher side due to arrears but do you know 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 an Automated Excel Based Calculator with Form 10E From the Financial The year 2000-01 to Financial Year 2020-21 ( Update Version) which will be helpful in calculating the relief under 89(1) for arrears received.
How it works
This the calculator shows two calculation of Income Tax, one is Tax on the basis of the receipt of salary/arrears and other is Tax on the due basis of relevant years and if the 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.Note /Faq on use of Calculator
You have to fill only the White Cell. (For online version-After each entry an updating sign will be shown, after the disappearance of the sign only then enter next data.).If arrears are related to few years than years provided in the sheet, fill zero in other non-required years.
All white cell is not mandatory to fill only which are required. Fill zero where no figures are required
Fill M for male and F for female (This calculator is not working for senior citizen above 60 years). You must select the status each year. Make sure that status has been selected correctly
Fill Taxable Income excluding arrears, including all other income and after all the deduction like section 80C,80CC,80D,80G,80U etc.
Fill year-wise break up of arrears received in the Financial year 2020-21 under respective years. Total will automatically be shown under The financial year 2020-21.
If any Arrears received under the Financial year 2020-21 is protected and can not be edited, If you have received arrears related to The financial year 2020-21 in the Financial year 2020-21 itself then it is not covered under the definition of arrears and to be included in the total income of The financial year 2020-21.
The result is out if total A >Total B then relief under section 89(1) will be shown, otherwise, 0 will be shown. Further Form 10E with relevant annexure will also be filled automatically including table-1
Limitations after filling the Master Data input sheet all calculation will be calculated automatically as per the each relevant Financial Year’s Tax Slab.