Income tax return filing: How to calculate relief for salary arrears and claim it

Salaried employees may receive some arrears or advances that are taxable in nature and, hence, relief must be claimed while filing an income tax return (ITR). These include salary arrears, advance salary, family pension arrears, commuted pension or any compensation on termination of employment and have a subsequent impact on gross salary leading to a significant jump in tax liability.

Consequently, this will push the individual to a higher income tax slab. Hence, the income tax act allows relief under Section 89(1) to reduce the impact of additional tax liability arising from the receipt of salary arrears. This relief can be claimed if the tax payable is higher after receiving such arrears.

In case there is no additional tax liability, relief is not allowed, experts say.