Arrears of hra cash medical benefit transport allowance

If arrears received by you has been taxed last year on due basis, the same will not be taxed when it is actually received. In your case, it seems that arrears has not been taken as income in previous year and thus will be taken as income of the year when received and will be taxed accordingly. As per points asked by you, my opinion is as follows --

1. No, you cann't recalculate your tax liability of previous years in respect to arrears received by you this year.

2. You should include this arrear in your current year earnings. However, you can claim tax relief u/s 89, if any for your arrear income.

3. Arrears is treated as 'Profit in lieu of salary' under clause 3 of section 17 of Income Tax. (https://incometaxindia.gov.in/Rules/Income-Tax%20Rules/103120000000007363.htm).

Read section 89 of Income Tax for tax relief in this regard.