relief us 89

Compensation received on VRS how to calculate relief us 89 ???
Replies (2)

You can claim exemption u/s 10(10C) for Voluntary Retirement Scheme of Rs. 500000/-
or

Relief u/s 89 
But not both together.

How to calculate relief u/s 89
Step 1 Calculate tax payable on the total income, including additional salary – in the year it is received.
Step 2 Calculate tax payable on the total income, excluding additional salary – in the year it is received.
Now you have to subtract the arrear from the total salary received(including the arrears),
After knowing the amount after arrear, you need to calculate the tax over the same.
Step 3 Calculate difference between Step 1 and Step 2
Step 4 Calculate tax payable on the total income of the year to which the arrears relate, excluding arrears
Step 5 Calculate tax payable on the total income of the year to which the arrears relate, including arrears
Step 6 Calculate difference between Step 4 and Step 5
Step 7 Excess of amount at Step 3 over Step 6 is the tax relief that shall be allowed.
Note that if amount at Step 6 is more than amount at Step 3 no relief shall be allowed.

thanks either 1 i can take .. 10(10c) or 89 relief . thank u very much sir. if i receive 600000 gratuity say 200000 exempt us 10 & exgratia i received 2000000 .. then i will get relief us 89 on 2000000 plus 400000(taxable gratuity) or only on 2000000 ????

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