help me out

Tax queries 588 views 4 replies

Shrestha Jain

Chartered Accountant

555 Points Joined April 2008

hello experts,

firstly i want to congratulate CCI'ities for such a nice panel of experts.

my question:

if mr. x has recieved arrears in two installments viz 40% in year 2008-09 and 60% in 2009-2010. arrears are for years 2005-6,2006-07,2007-08.

then how will we calculate relief for two years -> 2008-09,2009-2010.with the help of partical example pls give a small illustration with imaginary figures(i will appreciate if figures are simple for the sake of illustration so that i can understand it clearly).----i will like to clarify that i am not able to understand how will we get relief calculated on 60% in 2009-2010 if we have claimed relief on 40% in 2008-09.

Thanks in Advance

Replies (4)

manish

author

68 Points Joined June 2010

Dear brother,

ur question can be categorised in two parts :

40% relief for arrears received in 2008-09

and 60% relief for arrears received in 2009-10

As regards relief in respect of arrears of salary is concerned, Section 89 of IT Act would be applicable. Before any computation could be done, u must keep it in mind that for claiming relief in respect of first instalment, ur deadline has already expired. Becoz the ITR in respect of 2008-09 was to be filed by 31.07.2009 and maximum by 31.03.2010.

In my view u cannot claim relief in respect of first instalment of arrears.

As regards 60% arrears (2nd instalment is concerned), u have to download Form 10E from the website and provide the required information. That Form 10E would be certiified by DDO of your office and the relief calculated as per 10E would be adjusted in ur ITR.

manish

Shrestha Jain

Chartered Accountant

555 Points Joined April 2008

hello manish,

thanks for eplying my query,

but i want to ask in my original question if ihad already claimed 40%arrears relief in 2008-09 how will relief for 2009-2010 will be claculated for 60% arrears.

i dont know how to calculate relief for 60% arrears if relief had been claimed partially(40%) in some previous year.

thanks in advance

manish

author

68 Points Joined June 2010

dear nine,

Firstly u obtain the arrear sheet monthwise from ur office.

Then bifurcate the month wise arrears in two instalments (40% and 60%)

Remember to bifurcate it monthwise.

U will then have the data regarding arrears received in F.Y. 2005-06, 2006-07 and 2007-08.

Mark it as A, B, C and D (A for 2005-06, B for 2006-07 and so on)

Now, take out ur earlier ITRs for the respective years.

Add the income shown in ITR for 2005-06 + 40% bifurcation for 2005-06+60% bifurcation for 2005-06. Calculate the new tax liability for 2005-06.

repeat the exercise for other years as well.

Calculate the new tax liability for all the years.

Deduct the tax already paid for the respective years.

The balance will be ur new tax liability in respect of earlier years.

Deduct it from the tax liablity for the year 2009-10.

The balance will be ur 89 relief.

If u find it difficult to understand the procedure, u can download the form 10E and fill the required information. The resultant will be ur tax relief.