Urgent pls guide arrears of salary
This query is : Resolved
SUMIT ARORA
(Querist)
04 February 2016
Kindly guide
1. For rent free accomodation valuation arrears of salary included or not. |����
2. Revision of Basic Da Transport allowance from 2012
For relief under SEction 89
Taxable salary need to be calculated again with new rates
e.g. Transport all was previously Rs 800 in 2012 i.e. Fully exempt but after revision it is 1330 i.e. Taxable Rs. 530 from 2012. Will there be recomputation of every thing rfa hra ta salary taxable or not
Kindly reply soon please
Need guidance by 04feb
SUMIT ARORA
(Querist)
08 February 2016
Kindly resolve the issue
02 August 2025
Here’s a quick guide for your urgent queries on **arrears of salary** related to rent-free accommodation valuation and revision of allowances:
---
### 1. **Rent-Free Accommodation (RFA) valuation: Are arrears included in salary?**
* **Yes, arrears of salary include RFA valuation.**
* If the RFA benefit pertains to the arrears period (say previous years), the valuation of RFA for that period should be included in **salary income** when the arrears are received.
* This means when you receive arrears, the salary income for that year will include:
* Basic + Allowances + RFA valuation related to the arrear period.
* Important for computing tax and relief under **Section 89(1)** (relief for salary arrears).
---
### 2. **Revision of Basic DA and Transport Allowance from 2012: Impact on Tax and Section 89 Relief**
* When **allowance like Transport Allowance** was previously fully exempt (e.g., Rs. 800), and now revised (e.g., Rs. 1330), the **exempt portion is limited** as per rules (Rs. 800 for certain categories, balance taxable).
* For arrears of such allowances paid in the current year but relating to previous years (2012 onwards), you need to:
* Recalculate **taxable salary for those years** with revised allowance rates.
* Include taxable portion of Transport Allowance (Rs. 530) for the arrear period.
* **Section 89(1) relief is available** on such arrears to avoid double taxation. You recompute the tax liability for the years to which arrears relate, considering revised allowance rates and HRA etc., and then calculate the relief.
---
### Summary:
| Point | Treatment |
| --------------------------------- | ------------------------------------------------------------------------------------------------------------------- |
| Rent-Free Accommodation valuation | Included in salary income for arrear period |
| Revised Transport Allowance | Taxable portion included for arrears years |
| Section 89 relief | Recompute tax for respective years with revised salary components (HRA, TA, Basic, etc.) to claim relief on arrears |
---
If you want, I can help you with an example calculation or a draft for claiming relief under Section 89. Would you like that?
---
### 1. **Rent-Free Accommodation (RFA) valuation: Are arrears included in salary?**
* **Yes, arrears of salary include RFA valuation.**
* If the RFA benefit pertains to the arrears period (say previous years), the valuation of RFA for that period should be included in **salary income** when the arrears are received.
* This means when you receive arrears, the salary income for that year will include:
* Basic + Allowances + RFA valuation related to the arrear period.
* Important for computing tax and relief under **Section 89(1)** (relief for salary arrears).
---
### 2. **Revision of Basic DA and Transport Allowance from 2012: Impact on Tax and Section 89 Relief**
* When **allowance like Transport Allowance** was previously fully exempt (e.g., Rs. 800), and now revised (e.g., Rs. 1330), the **exempt portion is limited** as per rules (Rs. 800 for certain categories, balance taxable).
* For arrears of such allowances paid in the current year but relating to previous years (2012 onwards), you need to:
* Recalculate **taxable salary for those years** with revised allowance rates.
* Include taxable portion of Transport Allowance (Rs. 530) for the arrear period.
* **Section 89(1) relief is available** on such arrears to avoid double taxation. You recompute the tax liability for the years to which arrears relate, considering revised allowance rates and HRA etc., and then calculate the relief.
---
### Summary:
| Point | Treatment |
| --------------------------------- | ------------------------------------------------------------------------------------------------------------------- |
| Rent-Free Accommodation valuation | Included in salary income for arrear period |
| Revised Transport Allowance | Taxable portion included for arrears years |
| Section 89 relief | Recompute tax for respective years with revised salary components (HRA, TA, Basic, etc.) to claim relief on arrears |
---
If you want, I can help you with an example calculation or a draft for claiming relief under Section 89. Would you like that?
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