Relief Under Section 89 Of Income Tax Act

Rule 21a of it rules relief when salary is paid in arrears or in advance etc.

Relief under section 89 of income tax act. Relief under section 89 taxability in case of arrear of salary. To avail the benefit of section 89 1 it is mandatory to fill a form 10e. Therefore as is eligible to get relief under section 89 for 7 420.

Here are the steps to calculate relief under section 89 1 of income tax act 1961. Calculate difference between 1 and 2. In simple words you do not pay more taxes if there was a delay in payment to you and you were in a lower tax bracket for the year you received the money.

Calculate tax payable on total income including arrears in the year in which it is received. So the income tax law section 89 allows you to pay only amount that is payable considering as if you have received that income in ay 18 19 and has provided appropriate relief for tax payers. There is a relief available under section 89 of income tax act but you have to follow some procedure to get eligible for that relief.

To save you from any additional burden of tax due to delay in receiving income the tax laws allow a relief under section 89 1. Provision for form 10 e furnishing of particulars for claiming relief under section 89 1. In this scenario the tax department allow the assessee a relief under section 89 1 of income tax act to mitigate such hardship.

As amended upto finance act 2020. In that case relief of tax u s 89 is allowed under income tax act 1961 as then the assessee might have to pay higher taxes because the arrear advance salary is taxed in the year of receipt of the same and not in the year in which. Relief under section 89.

Gratuity received for past services extending a period of not less than 5 years but less than 15 years rule 21a 3 previous year in which gratuity received. Previously this section was applicable only for relief of salary arising from gratuity income. Usually salary income is received as it becomes due but it s quite often that an employee may receive a component of his salary in the form of arrear or advance salary in the course of employment.