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Arrears in NPS

30 July 2020

My employer has submitted arrears in for the NPS related deposits, I wish to avail exemption under section 89 for the same. Since, form 10E only have provision for Salary arrears, I am unable to claim exemption for NPS arrears and it is getting taxed as taxable salary in the current assessment year 2020-21. Need advice how to proceed on the case.

It may be noted that NPS contribution of employer is exempted under section 80CCD - 10% of Basic+DA, however since arrears are received in the financial year 2019-20 (assessment year 2020-21), the amount is getting taxed. Since its an arrears I intend to claim its exemption.

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3 Replies

Venkata Raman R (2 Points)
Replied 30 July 2020

I think, you are referring to arrears of employer’s contribution to NPS deposited during the previous year under consideration. You must be a public sector employee if am not wrong. I have also come across similar kind of case couple of years back and was successful in filing Form 10E which was also processed by CPC. Let me share with you the following steps for successful filing of Form 10E:-

1) Find out the arrears taxable in the current assessment year which will be employers contribution to NPS during the current year less eligible amount of deduction U/s.80CCD(2).

2) Amount eligible for deduction U/s.80CCD(2) will be 10% of Basic and DA of the current year.

3) The real problem arises at the time of filling Form 10E where we have to do some adjustments in finding out taxable amount of arrears in the respective years and the table used by me for finding out the arrears taxable in the respective arrears is as follows:-

Basic + DA of
respective year

Employer's contribution
to NPS @ 11%

Eligile amount of deduction
u/s.80CCD(2) @ 10%

Taxable amount of arrears
in the respective years

Total Income of
relevant previous year

Total income to be
considered in Form 10E

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Himang Jain (4 Points)
Replied 31 July 2020

Firstly thanks for your prompt reply....The problem arises truly when filling form 10E. I have attached my draft form 10E for your reference and remarks in the reply.

As observed from the sheet, the Sr No.(7) - Tax computed in accordance with TABLE'A' shows "0", the same arrears should again be exempted under sec 80CCD of previous year 18-19. but there is no provision to write an explanation or something for this.

Therefore I doubt anyone will be confused why there is no change in tax liability for 2018-19 despite adding arrears amount to that financial year. And I suspect notice from the IT dept if its done in the manner attached. Therefore I am trying to find out a full-proof manner to deal with this matter.

I mean how to justify that since its arrears of NPS its exempted from tax in 2018-19. Because there is no remarks field in form 10E..

Awaiting your kind guidance.

Attached File : 3157326 20200731091253 copy of it 10ee.xls downloaded: 460 times