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Pension Arrears (Income Tax)

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This query is : Resolved



( Author )
24 June 2011

Can i claim relief under section 89(1)on Family Pension Arrears of fifth & sixth pay commission.


C A S.S.Agarwal, M.Com.,LL.B,

( Expert )
25 June 2011

I am giving you the related section. If the Pension is of the nature given below then it is exempted or other wise you can claim 89(1) relief. If it is for the C. A. final examination then this is applicable or otherwise why you want to include this in previous years. The only reason could be the present salary is higher. Other wise offer for tax purpose only when it is received.


(10A) Any payment in commutation of pension received under the Civil Pensions (Commutation) Rules of the Central Government or under any similar scheme applicable [to the members of the civil services of the Union or holders of posts connected with defence or of civil posts under the Union (such members or holders being persons not governed by the said Rules) or to the members of the all-India services or to the members of the defence services or to the members of the civil services of a State or holders of civil posts under a State or to the employees of a local authority] or a corporation established by a Central, State or Provincial Act ;

(ii) any payment in commutation of pension received under any scheme of any other employer, to the extent it does not exceed—

a) in a case where the employee receives any gratuity, the commuted value of one-third of the pension which he is normally entitled to receive, and

b) in any other case, the commuted value of one-half of such pension,

such commuted value being determined having regard to the age of the recipient, the state of his health, the rate of interest and officially recognised tables of mortality ;

(iii) any payment in commutation of pension received from a fund under clause (23AAB) ;]


Abhishek Ranjan Singh

( Author )
25 June 2011

My client was getting family pension5000/- till August 2010
In August she get Arrears of125000/- of fifth pay commission (From 1st Jan 1996 to Dec 2005)
and
Arrears of432000/-of sixth pay commission (From Jan 2006 to Aug 2010)
and
from September 2010 onward she is getting monthly family pension of18200/

what will be her tax liabilities for AY 2011-12?


C A S.S.Agarwal, M.Com.,LL.B,

( Expert )
25 June 2011

First you calculate the details of the arrear year wise. Next income by recalculate the income by adding the arrear to the original income. Next Calculate the tax on the current income including arrear. If the total tax is greater than the total tax of all the year after taking the arrears in the respective years then only go for 89(1) relief otherwise file in regular course of income


Abhishek Ranjan Singh

( Author )
25 June 2011

How to calculate the Arrears?

Total arrears divided by no. of month * multiplied by 12


if this year tax is more than total tax of previous years.

how much relief i can claim?


C A S.S.Agarwal, M.Com.,LL.B,

( Expert )
25 June 2011

No

Take each year say
1.4.1999 to 31.3.200
Total Salary Perquisites and Pension if any =
Add: Arrear of pension pertaining to 1.4.1999 to =
Total of Both
Tax on the net taxable income

Like this for all the years.

It requires much labour but the relief can be given to the client.


Abhishek Ranjan Singh

( Author )
25 June 2011

No salary is is getting only family pension from Aug 1995


Abhishek Ranjan Singh

( Author )
25 June 2011

how to calculate per year arrears?


C A S.S.Agarwal, M.Com.,LL.B,

( Expert )
25 June 2011

Then this is commuted pension. If not then
Pension from August, 1995 to 31.3.1996 =.....
Arrear Pension fromAugust, 1995
to 31.3.1996 =.....
Total Pension original+arrear =....
This the taxable income
Tax payable =
Less: Tax Deducted at source =
Difference Tax Payable =
(This is to be added as tax Payable with the current year's tax) If no tax payable then tax payable for current year shall not be increased or deducted from TDS if any


Abhishek Ranjan Singh

( Author )
25 June 2011

No sir she getting regularly family pension from Aug 1995
5th Pay commission w.e.f. Jan 1996
and
6th Pay commission w.e.f. Jan 2006

she revised her family pension in Aug 2010 and get arrears total app. 6 lakh (1.25+4.5)

now question is that how to calculate her taxable income for AY 2011-12


C A S.S.Agarwal, M.Com.,LL.B,

( Expert )
26 June 2011

Kindly prepare XL file and send it to ssunderagarwal@gmail.com as there is no provision for attachment


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