Relief u/s 89(1) for arrear salary simplified with Excel Tool !Download it.

Central and State govt employees pay were revised in recent past on account of Sixth Pay Commission . So all govt. staff received lots of arrear payments for which now they are going to file return of Income . Naturally , one of the central concern among them is whether any relief from high tax on account arrear payments they received during FY 2009-10 are available. Yes, they can claim relief from tax on arrears received as per section u/s 89(1) of the I .T. Act. Read below

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Choose date for fixation of pay under 6th pay commission !

Media reported today (6th Jul2010 ) that according to an office-memorandum issued by the Centre on Monday
(5th July 2010 ) central govt. employees  have been allowed time till December to fix the base date for taking the new pay scale, from a date that is more beneficial to them.

Earlier, they did not have this option as the government had fixed January 1, 2006 as the cut-off date for implementing the new pay award.

The government, according to an office-memorandum, tweaked the norms in view of the representations received from employees. Earlier, the government, while implementing the Pay Commission award in 2008, had given employees three months to choose the switch-over date if it was later than January 1, 2006. The option, however, was to be binding.

Whether gratuity received on resignation or termination eligible for exemption

As per Board’s letter F. No. 194/6/73-IT(A 1) Dated 19.06.73 exemption in respect of gratuity is permissible even in cases of termination of employment due to resignation. The taxable portion of gratuity will qualify for relief u/s 89(1).

The gratuity payment is a certainty in every case today

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Five Tax Budget Proposal Affecting You Seriously!

Tax Slabs Expanded

New tax labs are as under

Upto 1,60,000  Exempt

Rs 1,60,001 to Rs 5,00,000       10 %

Ra 500001 to Rs 8,00,000        20 %

Over Rs 8,00,000                          30%

Therefore , majority of tax payers will get some kind of relief from tax.

Deduction u/s 80D  on Central Government Health Scheme

Till now , deduction was being allowed on medical insurance u/s 80D . Now , it is proposed that contribution to CGHS by central govt employees will also be eligible for 80D deduction.

Tax Deduction Threshold Limit Increased

There are provisons under which tax is deducted from contractual payments, Commission, Interest,rent,lottery winning, horse race winning etc. There is threshold limit below which tax is not deducted. Now it has been increased as under

Non Residents Cat’t Make Excuse!

An amendment in Section 9  retrospectively from  June 1976  which will close all the window of argument of a Non Resident that payment received by him/her/it is not taxable in India becuase of following reasons

  1. He /She/it has no personal residence in India or
  2. Place of business in India or ;
  3. Business connection in India;
  4. He has not rendered any service in India

None of the aforesaid argument given by an Non Resident Indian will hold ground for nt treating the payments received by him/her as taxable in India.

No Tax If You Receive Property for Inadequate Consideration

Section 56(2)(vii) had a very harsh provision that if one gets an immovable property without consideration or inadequate consideration, the difference between stamp duty value and actualy consideration given shall be chared to tax as income.

Now this section , amended from 1/10/2009 states that property without any consideration  can only be covered under this section and not property received by an Individual or HUF for inadequate consideration.