How releif u/s 89 is clacuted in case of arrears of pension

Method of computation of relief u/s. 89 [Rule 21A].

Find out two rates of tax.

First is the rate of tax applicable to the extra amount (arrears or advance) in the year of receipt/ getting taxed.

Second is finding out the rate of tax on extra amount for the years to which they relate.

Difference between the two is extent of relief.

In respect of salary/family pension paid in arrears/ advance {Additional Salary}

1.   Calculate tax on total income, including the additional salary of the previous year in which the same is received;

2.   Calculate the tax on total income as reduced by the additional salary of the previous year in which the same is received;

3.   Calculate the difference between tax at (1) and (2). The resultant figure is tax on additional salary in the year of receipt;

4.   Ascertain the previous years to which the additional salary relates;

5.   Calculate the tax on the total income as increased by the relevant additional salary in respect of each such previous years and total up such taxes for all such previous years;

6.   Calculate the tax on total income without including such additional salary in respect of each such previous years and total up the taxes for all such previous years;

7.   Calculate the difference between tax at (5) and (6). The resultant figure is tax on additional salary for the year to which it pertains;

The excess of tax computed at (3) over the tax computed at (7) is the amount of relief admissible.