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Taxablity of arrears received under sixth pay commission

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Querist : Anonymous

Querist : Anonymous (Querist)

16 January 2013 If arrears under Sixth Pay Commission received are deposited in a fund by the Government and are blocked in that fund for 5 years earning interest on that amount, then will the amount received under Sixth Pay Commission also be taxed along with Interest in the year in which it is deposited in the fund or will the amount be taxed after the lock-in period of 5 years when it shall be actually received by the employee.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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20 January 2013 In my view, the employee does not have any effective control on the amount deposited in the fund directly by the government.
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It can also be argued that the amount has not still become due to be received by the employee.
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So, it can be taxed on receipt basis-i.e. after lock in period ...and can be treated as Salary Income.
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