Tax Relief u/s 89(1) on Salary Arrears Received

By | January 24, 2013

Tax relief u/s 89(1) when salary received in arrears or in advance

As the arrears of salary related to 6th pay commission is being received by the employees, it becomes necessary for the receivers to understand the tax treatment as well as tax relief on the amount received. When a person/employee receives arrears or any advance in a financial year , he is required to get year wise bifurcation of the amount received, to save income tax on the income under section 89.

Who is eligible to allow relief u/s 89 (1)?

Some specified DDO’s can allow relief under section 89(1) . List of employers who can allow benefit u/s 89(1), if claimed by employee, is given as under :-

  1. Company,
  2. Co-operative Society
  3. Local Authority
  4. University,
  5. Institution,
  6. Association or body
  7. Govt State or center
  8. Public sector undertaking

Complete detail regarding Section 89 is given as under:-

Relief when salary, etc., is paid in arrears or in advance.

89. Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section 57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed.

The following proviso shall be inserted in section 89 by the Finance (No. 2) Act, 2009, w.e.f. 1-4-2010 :

Provided that no such relief shall be granted in respect of any amount received or receivable by an assessee on his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of a public sector company referred to in sub-clause (i) of clause (10C) of section 10, a scheme of voluntary separation, if an exemption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under clause (10C) of section 10 in respect of such, or any other, assessment year.

Calculate Tax Relied u/s 89(1) @


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