Relief When Salary, is paid in Arrear or in Advance

Where an assessee is in receipt of a sum in the nature of salary, being paid in arrears or in advance, in any one of financial year, of salary for more than twelve months, due to which his total income is assessed at a rate higher than that at which it would otherwise have been assessed, the Assessing Officer shall, on an application under Form No. 10E made to him in this behalf, grant such relief u/s 89(1) is also allowed in respect of family pension u/s 57, if beng paid in arrear or in advance.
Step 1 Calculation of Differential Tax — In the Year of Receipt
 Calculation of Tax on Income inclusive of arrears / advance amount
 Less : Calculation of Tax on Income excluding of such amount
  Differential Tax in the Year of Receipt

Step 2 Calculation of Differential Tax — In the Concerned Year
 Calculation of Tax on Income inclusive of arrear / advance amount
 Less : Calculation of Tax on Income excluding of such amount
  Differential Tax in the Concerned Year

Step 3 Relief u/s 89(1) Step 1 – Step 2

 

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