I have received arrear pension from EPFO, Kolkata, due for eight years. My question is whether I am eligible for getting 89(1) relief or not.
Sanat Kumar Goswami
Yes, you may be eligible for relief under Section 89(1) of the Income Tax Act, 1961 (the Act), for the arrear pension received from EPFO, Kolkata, which pertains to the previous eight years.
This section provides relief for taxpayers who receive a lump-sum amount, such as arrears of salary or pension, relating to prior years. To claim this relief, you will need to calculate the tax payable on your total income for the year in which you have received the arrears of pension and compare it to the tax that would have been payable if the arrears had been spread over the relevant prior years. The relief is determined by the difference between these two amounts.
Additionally, you must complete Form 10E when filing your income tax return to formally claim this relief. It is essential to keep all relevant documentation, including details of the arrear pension and the income for each prior year, to support your claim.
The author is a practising Chartered Accountant
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