Download Excel Form 10E-Salary Arrears Relief Calculator U/s 89(1) for A.Y 2022-23 |
Under Section 89 (1) of the Income Tax Act, an income tax exemption is granted in 1961 when an employee receives arrears or prepayments in a financial year. Form 10-E is required to apply for relief under Rule 21A of the Income Tax Rules, 1962.
According to the rules, if the employee is a civil servant or an employee of a company, cooperative, local authority, university, institution or organization, he can present him with Form 10E to request the exemption. / Your employer who is required to pay the salary referred to in subsection (1) of section 192 of the Income Tax Act, 1961
In all other cases, the assessor must submit an application on Form 10E to the Income Tax Assessment Officer to claim relief. The assessment of the exemption under section 89 (1) is acceptable in the year that the employee receives arrears or advances.
Salary revision has become common, especially in the public sector. Since independence, the government has set up six wage commissions. Salary arrears following the recommendations of each commission with prior effect. The rationale behind granting this relief under section 89 is that due to the payment of arrears or advances received in a particular financial year, the employee's income increases due to the amount of arrears or 'advance. Consequently, the employee's income is taxed at a rate higher than that at which his income would have been taxed had there been no arrears or advances.
The steps involved in calculating the exemption under section 89 (1) basically include the following steps:
First: split the amount of arrears or advances received in the specified fiscal year to which they are related and recalculate income tax for each year if arrears are received in the corresponding fiscal year.
Calculate income tax separately for each year without taking into account arrears or anticipated income.
Third: deduct the total income tax from step 1 to step 2.
Fourth - Calculate the income tax for the year in arrears including the arrears / advances received.
Fifth - Calculate the income tax for the year for which arrears were received, excluding arrears / advances received.
Sixth: The income tax deduction has come to step 5 from income tax to step 4
The seventh income tax deduction came in step 3 from income tax in step 6
This figure is the amount of the relief under section 89 (1).
