Section 89(1) of the Indian Income Tax Act refers to the relief of salary. It provides a formula for calculating the relief that is available to an individual taxpayer who has received arrears of salary, advance salary, or has received compensation on account of premature retirement.
The purpose of Section 89(1) is to provide relief to taxpayers who receive a lump sum payment that includes both taxable and non-taxable elements, such as arrears of salary, to prevent double taxation. The section provides a formula to determine the taxable portion of the lump sum payment, based on the average rate of tax applicable to the individual’s taxable income in the previous years.
To claim relief under Section 89(1), an individual must provide the necessary evidence of the payment received and must file a claim with the tax authorities. It’s important to consult a tax professional for specific guidance on the relief available under Section 89(1) of the Indian Income Tax Act, as the rules and procedures can be complex and subject to change. For more info click here
Features of Form 10E
Form 10E is a form used in India for claiming relief under Section 89(1) of the Income Tax Act, 1961, in cases where an individual has received arrears of salary, advance salary, or compensation on account of premature retirement.
Some of the features of Form 10E are:
Purpose:
Form 10E is used for claiming relief under Section 89(1) of the Income Tax Act, 1961, for individuals who have received a lump sum payment that includes both taxable and non-taxable elements.
Eligibility:
The relief under Section 89(1) is available to individuals only and is not applicable to other forms of income, such as business or investment income.
Information Required:
Form 10E requires the individual to provide information on the lump sum payment received, including the amount, the nature of the payment, and the tax already paid, if any.
Calculation of Relief:
The relief under Section 89(1) is calculated using a formula that considers the average rate of tax applicable to the individual’s taxable income in the previous years.
Filing:
Form 10E must be filed with the tax authorities in India and must be accompanied by the necessary evidence of the payment received.
Time Limit:
Form 10E must be filed within one year from the end of the financial year in which the lump sum payment was received.
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