Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Arrears received after 15 years.

15 July 2024

Sir /Madam, One of my client was retired in 2009, due to some legal issues he didn't receive his pension till 23-24. In 23-24 he received Pension around 55 lakh, TDS deducted 20 lakhs.

He didn't file his ITR from 2009 to 2021.
1)Can I claim deduction in section 89 ?
2)is there any other way to save his Tax ?

Thanks in advance.

Reply
Follow
Share

1 Replies

Rama chary Rachakonda (Master in Accounts & Lawyer email ID:ramachary64@gmail.com voice no:9989324294) (3374 Points)
Replied 15 July 2024

Yes. an individual can claim deduction under section 89 of the income-tax Act,1961. for arrears of income received after 15 years. Section 89 provides relief for tax payers who receive arrears of income in a financial year, which was not taxed in the previous year. The relief is provided in the form of a deduction from the tax liability. To claim deduction under section 89, the following conditions must be met: 1. The arrears of income must be related to a previous year 2. The arrears must be received in a subsequent year. 3.The income must be taxable in the previous year 4.the taxpayer must have paid tax on the arrears in the previous year. The deduction under section 89 is calculated using the following formula. Deduction = (tax on arrears in the previous year x number of years for which arrears are received)/(1 + Number of years for which arrears are received) In your case, since the arrears are received after 15 years, the deduction would be calculated accordingly.