Hi,
My mother is a Central Govt Family Pensioner. In 2012, she got arrears for the last 6-7 years (since Jan 2006). While filing for her tax return now, I'm computing the relief she is entitled to under section 89. For this, I'm computing the income tax she was liable to pay each financial year if she would have got the arrears related to that year then itself.
I have a question related to calculation. For example, in AY 2007-08, her income is coming around 1.65 Lacs. The slab rate for that year says - 0 Tax for income less than 1.35 Lacs (she was not sr citizen as per the definition in that year). Now if i deduct Rs. 15000 as standard deduction then her taxable income comes to 1.5 Lacs. So, still she has a liability of paying tax for Rs 15000, which is in excess of 1.35 Lacs. However, if it was the actual case then, she would have done investment of Rs. 15000 in 80C so that there is no tax liability.
Now while calculating relief u/s 89, can I use this logic of investment u/s 80C and take the relief of the complete amount or I cannot do that?
Best Regards
Mohit
CAclubindia
