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Understand relief u/s 89 in cases where salary received in arrears or advance, arrears from family pension, commuted pension, gratuity received, compensation after layoff or termination.
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Any payment made by an employer to his employee for the rendered services will be chargeable under the head salaries. For the income to be chargeable under the head 'salaries', there should be a relationship of employer and employee between the payer and payee.
If the taxpayer's salary is paid in arrears or advance and the taxpayer's taxable income increases due to such arrears or advance which results in higher income tax, relief u/s 89 will be given from the income tax payable.
Relief u/s 89 can be claimed in the following situations
Mr Arjun is a salaried employee, and he is getting an salary of Rs 50000 per month. His salary was increased to Rs 60000 from Feb 2022 and it got paid in May 2022. As the salary for Feb and March 2022 of Rs 20000 got paid in May 2022, it is treated as arrears of salary.
Following are the steps to compute the relief u/s 89 for Arrears or Advance salary
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