SANJAY JOIL (EMPLOYEE) (28 Points)
13 March 2011Dear all,
I have a query and need answer along with circular, rule , case-law or any pdf or doc in this regard. While calculating relief u/s89(i) what treatment should be given to arrears of transport allowance(which is exempted upto 9600 p.a.) and arrears of medical benefit (which is exempted upto 15000 p.a.). Please give some valid answer with documentary proof which I can submit to my office.
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 13 March 2011
Relief u/s 89(1) is available to an employee when he receives salary in advance or in arrear or when in one financial year, he receives salary of more than 12 months, or receives 'profit in lieu of salary' covered u/s 17(3). W.e.f. 1.6.89 89(1) relief can be granted at the time of TDS by employers in the following conditions :
| (1) | If the employee is a Government Servant. | ||||||||||||
| (2) | He is employee in a | ||||||||||||
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The employee may furnish to the DDO or the person responsible for making payment such particulars in Form 10E (read with Rule 21 AA) which should be duly verified by him. Thereupon the DDO/Person responsible for making payment is required to compute the relief u/s 89(1) on the basis of such particulars and take into account this relief while making tax deduction u/s 192. In case of an employee of category other than the stated above, such relief can only be allowed by the Assessing Officer.
https://www.incometaxindia.gov.in/publications/2_TDS_On_Salaries/Chapter07.asp
SANJAY JOIL
(EMPLOYEE)
(28 Points)
Replied 13 March 2011
Thank you very much Sharma Sir. But my query is a little bit different. I wanted to know whether while bifurating the arrears in earlier years,transport allowance and medical benefit allowance should be deducted from that arrears or not. Upto 9600 transport allowance is exexpted . If i received Rs.5000/- towards transport allowance of 2007-08 and arrears of Rs.50000, while calculating tax of 2007-08, should i add RS. 50000 or Rs.45000 only. (assume that in 2007-08 I had received transport alloance of Rs.2000 only.)
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 13 March 2011
if the allowance is granted to you by employer then they will deduct the same in their recrods auto, u cant claim with your own wish with the incometax rules,
89(1) deals will arrears / advances for salaries and payment in lieu of salaries , so ur gross amount is to be declared.
SANJAY JOIL
(EMPLOYEE)
(28 Points)
Replied 13 March 2011
Thanx Sharma Sir. The arrears comprises difference in payments of basic, d.a., hra, cca, transport allowance, encashment of p.l. , medical benefit drawn during the arrears period. If while granting relief in case of gratuity and encashment of pl, the amount over and above exempted limit is bifurcated, then why not in case of allowances exempted from salary.
Some of the calculation sheets available on net also provides for such deduction but nowhere I found that ..... such exemption is allowed or such exemption is not allowed. In last 17 years, we were paid arrears for 4 times and every time we allowed the deduction of medical benefit and transport allowance. However, this time our auditor raised query and asking for proof. That is why, I need documentry proof where it is clearly mentioned that it is deductible or not.
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