Calc of Marginal Relief

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Dongre Arun

Dongre Arun (Querist)
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13 March 2008
Am not very clear abt this calculation.

I need explanation with an Eg.

So pls. ans this Q.

Re.

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008 Marginal relief is explained u/s 89(1) for receiving arrear salary

i had attaching one example here as follows ,

In case of Mr.X he receives salary for the previous year 2006-07 is Rs210000/ & arrear of salary received Rs50000 eligible besides he gives us the details of previous year salary:

P.Y Taxable salar Arrearreceivednow
00-01 60000 10000
01-02 65000 15000
02-03 75000 25000
Compute relief u/s 89 of IT Act & tax payable

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008 Computation of Tax Payable:
Salary inc Salary excl
Arrear Arrear

Current Year Salary 210,000.00 210,000.00
Add:Arrear Salary 50,000.00 -
Taxable Salary 260,000.00 210,000.00
Income tax thereon 28,000.00 17,000.00
Add: Education cess 560.00 340.00
Total Tax Payable 28,560.00 17,340.00

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008 Compuation of Tax Payable on arrears of salary if charged to tax in the
Respective assessment years :
AY 2001-02
INC Arrears Exc Arrears
Taxable Salary 60,000.00 60,000.00
Add:Arrear Salary10,000.00 0
Taxable Salary 70,000.00 60,000.00
Income tax thereon3,000.00 1,000.00
Add: Education cess360.00 -
Total Tax Payable 3,360.00 1,000.00

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008
Taxable Salary AY 2002-03
SalaryINC Arrears Exc Arrears
Taxable Salary 65,000.00 65,000.00
Add:Arrear 15,000.00 0
80,000.00 65,000.00 Income tax thereon5,000.00 2,000.00 Add: Education ces 100.00 40.00
Total Tax Payable 5,100.00 2040.00

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008 AY 2003-04 INCArrears Exc Arrears
Taxable Salary 75,000.00 75000
Add:Arrear Salary 25000 0
Taxable Salary 100,000.00 75,000.00
Income tax thereon9,000.00 4,000.00 Add: Education cess 450.00 200
Total Tax Payable 9,450.00 4,200.00

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008 Increase in tax because inc of Arrear Salary
00 - 01 2360.00
01 - 02 3,060.00
30 - 04 5,250.00
Relief u/s 89
i). Tax Payable in A.Y 2007-08 on arrears
Tax on income including Arrears 28,560.00
Less: Tax on income excluding arrears 17,340.00
11,220.00
ii). Tax Payable inrespective years on arrears
Tax on total income including arrears 17,910.00
Less:tax on income excluding arrears 7,240.00
A.Y2007-08 & tax on arrear in respective years 550.00

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008 Tax payable for A.y 2007-08 after relief u/s 89
Incme tax payable on total income including
arrear of salary 28,560.00
Less: Relief u/s 89 as computed above 550.00
Tax Payable after claiming relief 28,010.00

Gayathri Devi

Gayathri Devi (Expert)
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14 March 2008 According to my understanings i just to try to explain the marginal relief of arrear salary

I cant able to send all details in one single scrap so i spilt it & send you in each scrap so see one by one scrap continously

I am also not so genius in Income tax i am doing Final so i explained as per my view

VShree Dr. VIKAS SINGH

VShree Dr. VIKAS SINGH (Expert)
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05 June 2014 Well I;m too late to respond to Mr. Arun's doubts. But Gayatri Ma'm (Hopefully ACA Gayatri at present) question asked was about the Marginal Relief.
Marginal Relief is granted in case when there is inflationary impact on tax liability of an assessee due to surcharge, applied on Total Income which has exceeded marginally by Rs. 1 crore (Presently).
And what u explained to him is Relief u/s 89(1).

Regards
VShree

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