Monday, August 10, 2015

Spare one hour and save few thousands!

Spare one hour and save few thousands!

Most of Bank Employees have by this time received arrears of salary on the eve of wage revision.
You might have noticed that the entire arrears of salary relating to different Financial Year, was added in this year Income. Hence the total Income may be surpassed the slab Rs.5, 00,000 or
Rs.10, 00,000 depending upon the service and cadre you belong to.
There is a provision under Sec.89 (1) to appropriate the arrears  to the respective previous years.
(Some of the seniors might be knowing this provision). By preparing a statement and recalculating the Income Tax for all the four financial year, one may get some benefit by way of reduced Income Tax. It depends on the individuals Income.
This calculation may be prepared according to the format (10E) and submit to the Bank, and get the relief. Risk and responsibility lies with the employee for claiming correct relief amount. Bank has to accept the claim received from the employee and reduce the Income tax or refund the Tax already deducted to that extent, provided deducted amount is not transferred. If the funds are already transferred at least Bank will desist from recovering Income tax from August 2015 salary to March 2015.
Any excess Tax deducted may be claimed from I.T Dept. by filing return after March 205.

Pl. read the following taken from Bank’s circular:

The scope of deduction of Tax at Source from salaries was modified by the Finance Act, 1987.
According to Section 192 (2A) of Income Tax Act read with Rule 21 (A) of the Income Tax Rules,
the employer is empowered to allow relief under Section 89(1) of the Income Tax Act whenever
Salary/any payment in the nature of profit in lieu of salary is paid in arrears or in advance (the bank
is under obligation under section 89 to deduct tax by taking the relief under consideration).
The employees should furnish the following particulars to enable the employer to allow such relief
under Section 89(1).

a. The employee should furnish the application in Form No. 10E along with Annexure 1 in
Duplicate after filling all the columns and the form appropriately verified by the employee.
The verification should be signed by the employee. Please note that any person making a
false statement is liable to be prosecuted under Section 277 of the Income Tax Act.

b. From the Financial year ending 1992-93 the filing of Income Tax Return is compulsory for
those who are within the Taxable Income category. Such of those employees should
produce copy of their acknowledgement of Income Tax Return Form No.3 or Form No.2A
as the case may be for each year for which Relief under Section 89(1) is sought in support
of their claim.

c. Those employees, who are not coming under category (b) above, should furnish copy of
their Form 16 for each year for which relief under Section 89(1) is sought in support of their

d. In case the salary disbursing authority is not satisfied about the genuineness of the
employee’s claim under Section 89(1), he should not allow the same, and the employee
should be free to claim the relief under Section 89(1) by filing his return of Income to the
satisfaction of the Assessing Officers.”

Format of 10(E) with Annexure 1 may be downloaded from web.
A readymade Relief calculator under sec 89(1) is available in the following webpage.
It is enough if you give particulars in the relevant columns and you will get  relief amount and filled in necessary forms 10(E) and Annexure 1

Documents necessary for arriving at relief:
1. Form16 or I.T. calculation sheet for previous years
2. Arrears calculation sheet provided by Bank with year wise breakup
3. Income tax Projection sheet (including arrears received) provided by Bank for F.Y.2015-16



priya said...

projection income which one we have to take for total income excluding arrear.pls provide step by step procedure if it is possible..

Anonymous said...

If any one interested to get rebate under section 89(1) which pertains to arrears paid of previous year I have a simple tax calculation calculator which is user friendly. If interested send mail to I will send the same along with DA calculator.

Anonymous said...

Sir, i didnt pay any income tax fr last two fin yrs.. bt tax detected from my arrears fr this fin-yr.. can i get this relief sir..

Mamatha rao said...

If not submitted form 89 to the employer and tax already been deducted, can we claim from it Dept? If yes how? Please guide