Doubt on section 89 relief

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 February 2016 sir i couldn't understand the concept behind section 89 relief on the method of calculation..
is there any logic behind it or we need to just remember it like that..
pls explain it clearly........thankyou

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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02 February 2016 Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance or is in receipt, in any one financial year, of salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family pension as defined in the Explanation to clause (iia) of section 57, being paid in arrears, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application made to him in this behalf, grant such relief as may be prescribed.

under relief u/s 89
Step 1 Calculate tax payable on the total income, including additional salary – in the year it is received
Step 2 Calculate tax payable on the total income, excluding additional salary – in the year it is received
Step 3 Calculate difference between Step 1 and Step 2
Step 4 Calculate tax payable on the total income of the year to which the arrears relate, excluding arrears
Step 5 Calculate tax payable on the total income of the year to which the arrears relate, including arrears
Step 6 Calculate difference between Step 4 and Step 5
Step 7 Excess of amount at Step 3 over Step 6 is the tax relief that shall be allowed.
Note that if amount at Step 6 is more than amount at Step 3 no relief shall be allowed.

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