If you have received arrears of salary/pension in Financial year 2020-21 related to previous year(s) then your tax liability will be on 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 a Automated Excel Based Calculator with Form 10E From the Financial Year 2000-01 to Financial Year 2020-21 ( Update Version) which will be helpful in calculate the relief under 89(1) for arrears received.
How it works
This calculator show 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 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 White Cell. (For online version-After each entry an updating sign will be shown, after disappearance of the sign only then enter next data.).If arrears is related to few year than years provided in the sheet, fill zero in other non required years.
All white cell are not mandatory 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 in 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 Financial year 2020-21 under respective years. Total will automatically shown under Financial year 2020-21 .
If any Arrears received under Financial year 2020-21 is protected and can not be edited ,If you have received arrears related to Financial year 2020-21 in Financial year 2020-21 it self then it is not covered under the definition of arrears and to be included in total income of Financial year 2020-21.
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 the all calculation will be calculate automatically as per the each relevant Financial Year’s Tax Slab.