06 March 2009
after recomendations of sixth pay commission,empolyees are getting salary this year with arrear. govt are giving 40% arrear in this year & balance in next year. but my question is now regarding the taxablity of arrear amount. whether whole amount is taxable this year or only 40% is taxable. in my opinion,100% arrear amount is taxable in year of accrual but there is common doubt among the public that govt has come with a clarification that only 40 % arrear is taxable this year & balance is taxable in next year have you any information this regard & please share with me on urgent basis. thanks
06 March 2009
Dear Manoj, Income Tax u/s 89 says that "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....." Here word recepit is doesnt define, but considering the arrear I believe it should be on actual recepit basis because if the 100% amount is taxable then assessee is elegible to get relief on 100% amount which he has not received, which is not acceptable. Furthure I can say revising in salary it should not be considered on due basis, as due basis is confined to previous year salary only. Your doubt is genuine, till date no such clarification by Govt. on this.
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