ITR
Arrears for years with income below taxable limit
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
Yes, relief is usually larger when earlier income was low, because the arrears would have been taxed at little or nothing in those years. The computation still uses each year's actual income and rates.
Provisions and law
- Sec 89 (now Sec 157)Relief when salary or family pension is received in arrears or in advance
- Rule 21A, Income-tax Rules 1962Manner of computing Sec 89 relief and Form 10E
Analysis
If you were a trainee with income of ₹2,40,000 in FY 2020-21 and now get ₹1,00,000 of arrears for that year, adding it then takes income to ₹3,40,000, where the Sec 87A rebate made tax nil. If this year's income puts the arrears in the 20% band, they cost about ₹20,800 with cess now. Relief may be close to the full ₹20,800. Use the rebate and slabs of that year.
Conclusion
- Get income for each earlier year even if no ITR was filed
- Compute tax for those years with the arrears added
- Fill Annexure I
- Claim relief in the ITR
A Savvy can do this for you
Tax planning
₹999
Get this doneAsk a Savvy on WhatsAppGeneral guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.