Tax Relief on Arrears: If someone has received arrears along with salary, then they are taxable. But if you submit a form, then you can get exemption on it.
Tax Relief on Arrears: During the appraisal season, many employees must have received salary in the form of arrears. They may be happy to see more money than usual, but employees should also keep in mind that this is also the season of filing income tax returns. So, if someone has received arrears along with salary, will they be taxable? According to income tax rules, the answer is yes. Arrears are also taxable. But before filing your ITR with arrears, it is important to know some important things. Taxpayers should keep in mind that they can claim deduction on the arrears amount.
Under which section is tax exemption available?
Section 89 of the Income Tax Act offers tax benefits to those individuals who have received some part of their salary in ‘arrears or advance’. Deduction under Section 89 can be claimed on any of the following salary received during a year:
1) Salary received in arrears or advance
2) Premature withdrawal from PF
3) Gratuity
4) Commuted value of pension
5) Arrears of family pension
6) Compensation received on loss of job
Relief under Section 89 – How to claim
If someone has received arrears of his salary, he can claim it for deduction from taxable income under Section 89. But he will have to submit Form 10E. The form has to be submitted online on the e-filing portal of the Income Tax Department.
If a taxpayer does not file Form 10E, he will not get exemption on arrears.
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