Finish your
E-filing before 31st August 2018.
You do not pay more taxes
if there was a delay in payment to you and you were in a lower tax bracket (5
or 10 lakh) for the year you received the money. If you already submitted your return without
10E you may submit Revised IT Return.
If
an employee or his family receives pension arrears or salary arrears, he or she
can claim tax relief under Section 89(1).
Salary is usually taxable when
it is due or when it actually received, whichever is earlier. Arrears are
usually announced from a back date and therefore cannot be taxed when due. Receiving
salary or pension in arrears might change your tax situation. You may fear it's
going to move you up a tax slab. Or tax rates may be higher in the year arrears
are received as compared to the year to which they belong. To protect you from
any additional tax burden, due to delay in receiving income, the tax laws allow
a relief under Section 89(1) read along with Rule 21A.
Relief under Section 89(1) is also allowed to those who
receive family pension in arrears. The calculation is the same as mentioned
below.
Income Tax Slab for Individual in INDIA
Annual Income Range (in Rupees)
|
Tax Rate (in %)
|
FY 2016-17
|
FY 2017-18
|
FY 2018-19
|
Zero – 2,50,000
|
Nil
|
Nil
|
Nil
|
2,50,000-5,00,000
|
10%
|
05%
|
05%
|
5,00,000-10,00,000
|
20%
|
20%
|
20%
|
Above 10,00,000
|
30%
|
30%
|
30%
|
Less: Rebate u/s 87A – It is only applicable
to resident individuals with income up to Rs 3,50,000. The
maximum amount of rebate allowed is Rs 2,500 for FY 2017-18; with income
up to Rs 5,00,000. The maximum amount of rebate allowed is Rs 5,000 for FY
2018-19.
Add: Surcharge for FY 2017-18 – A surcharge @ 10% of
tax is applicable if income lies between Rs 50 lakh to Rs 1 crore, but if it
exceeds Rs 1 crore then the surcharge will be payable @ 15%.
However, surcharge is subject to marginal relief as stated:
- If
income exceeds Rs 50 lakh or Rs 1 crore as the case may be, the applicable
tax plus surcharge should not exceed the part of income which is in excess
to Rs 1 crore.
Surcharge for FY 2018-19 – A surcharge @ 15% of
tax is applicable if income exceeds Rs 1 crore. However, surcharge is
subject to marginal relief as stated:
- If income exceeds Rs 1 crore, the applicable tax plus
surcharge should not exceed the part of income which is in excess to Rs 1
crore.
Add for FY 2017-18: “Education Cess” and
“Secondary and Higher Education Cess” shall be levied at the rate of 2% and 1%
respectively, on the amount of tax computed, inclusive of surcharge.
Add for FY 2018-19: “Education Cess” and
“Secondary and Higher Education Cess” will be replaced by “Health and Education
Cess” at the rate of 4%, on the amount of tax computed, inclusive of surcharge.
Suppose an employee's
annual salary is Rs. 9.50 lakh and receives Rs. 1 lakh as arrears, of which Rs.
50,000 is for the previous fiscal year. His/her tax slab will change. The total
income for this year will be Rs. 10.50 lakh as against
Rs. 10 lakh (including the arrears of this year).
Income of individuals above Rs. 10 lakh is taxed at
the rate of 30 per cent while income between Rs. 5
lakh and Rs. 10 lakh is taxed at the rate of 20 per
cent.
The Income Tax Department has made it mandatory to file
Form 10E if you want to claim relief under Section 89(1). As per Section 89(1),
tax relief is provided by recalculating tax for both the years; the year in
which arrears are received and the year to which the arrears pertain. Your
taxes are adjusted assuming arrears were received in the year in which they
were due.
Your employer may ask for confirmation of submission of
Form 10E before adjusting your taxes and allowing tax relief. It is not
mandatory to submit this form to the employer. You can claim tax relief by
filing this form at the time of submitting your tax returns.
Let's understand this calculation in detail. for example:
Step by step process to get the benefit of reimbursement tax amount
paid.
An amount of
₹ 1,00,000 in FY 2017-18 as
arrears which, I was supposed to get in FY 2015-16.
My earning in FY 2017-18
including arrears is
₹
5,28,000, tax paid for FY 2017-18 is
₹ 32,150.
On the other hand, my earning in FY 2017-18
excluding arrears
is
₹ 4,28,000, tax paid for FY
2017-18 is
₹ 22,350.
Subtracting the value of both the tax paid amount is
₹ 9,800.
In FY 2015-16 my earning
including arrears is
₹ 3,51,000,
tax paid for this FY is
₹ 18,780 and in FY 2015-16
my earning
excluding arrears is
₹ 2,51,000,
tax paid for FY is
₹ 12,780. After Subtracting the
value of both the tax paid amount is
₹ 6,050.
In the Final step:
Subtracting both the differences (
₹9,800 - ₹6,050) we get
₹ 3750/=
That is the amount we can get relief under section 89(1) by filling of form
10E. You must submit Form 10E before filing your income tax return otherwise received a notice from IT department for non-compliance.
Taxpayers who have claimed relief under section 89(1) but
have not filed Form 10E have received an income tax notice from the tax
department with the following lines –
The relief u/s 89 has not been allowed in your case, as
the online form 10E has not been filed by you. The furnishing of Online form
10E is required as per sec.89 of the Income Tax Act
Many taxpayers are confused about which assessment year
to choose while filing Form 10E.
Arrears may pertain to earlier years; however, one has to
choose the assessment year in which arrears have been received. For example, if
arrears are received in financial year FY 2015-16, choose assessment year as AY
2016-17.
Form 10E has to be submitted online and no copy is
required to be attached with your tax return. However, you must file and keep
all documents safely in your records.
How to file Form 10E
Form 10E can be filed online. Here are the steps to file
Form 10E online
Step 2: After you have logged in,
click on tab named ‘e-File’ and select ‘Income Tax Forms’.
Step 3: The below screen shall appear.
Select Form 10E, the assessment year “2018-19” and the submission mode “Prepare
and Submit Online” from the drop-down.
Step 4: The below screen shall appear
with instructions on how to file Form 10E and enter the details in blue tabs
provided.
Step 5: On completing the Form, click
on ‘Preview and Submit’.
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