Sec 89a of income tax act

Section 89A of the Income Tax Act, 1961 was introduced by the Finance Act, 2020, and is effective from April 1, 2020. This section provides relief to taxpayers who have opted for the new tax regime introduced in the same Finance Act, but have pending claims or returns from the previous tax regime. Under the new tax regime, taxpayers have the option to opt for lower tax rates but are required to forego certain deductions and exemptions available under the previous tax regime. This led to a situation where some taxpayers, who had pending claims or returns under the previous tax regime, were unable to avail of the benefits of those claims or returns. Section 89A was introduced to address this issue and provides relief to taxpayers who have pending claims or returns from the previous tax regime. The section allows such taxpayers to claim the benefits of their pending claims or returns in the year in which they opt for the new tax regime. The relief under Section 89A is available to taxpayers who have opted for the new tax regime and have a pending claim or return under any of the following provisions of the Income Tax Act: Section 10(5) – Leave travel concession Section 10(13A) – House rent allowance Section 10(14) – Special allowances or benefits Section 10(17) – Pension received by a family member of a deceased employee Section 24(b) – Interest on housing loan Section 32 – Depreciation Section 32AD – Investment in new plant or machinery in notified backward are...

• • • • • • • What is arrears of Salary? Arrears of Salary refers to any outstanding due of the previous period paid later on in a different assessment year. Further, salary may have been revised but increments can be paid at a later date or increment could be revised retrospectively. Therefore, in such cases, the differential amount paid in the subsequent period is known as salary arrears. The employer mentions it separately in the salary slips and part B of Taxability of Salary Arrears Arrears of salary is treated as salary income in the ITR. They are taxable in the year of receipt. However, the taxpayer may be worried about paying taxes at a higher rate because of a higher tax bracket in the year of receipt or due to a change in the applicable For Example: Arjun’s salary is INR 50,000 per month. His employer raised the salary to INR 60,000 per month in April 2020 effective from March 2020. Since the salary for March 2020 would already be paid, the additional INR 10,000 is paid in April 2020. This is called Salary Arrears. Find the best plan Explore Relief under Section 89(1) A taxpayer receiving any portion of the salary in arrears or in advance or receiving profits in lieu of salary can claim relief under Sec 89(1) of the Income Tax Act. If the total income of a taxpayer includes any past salary paid in the current financial year and the tax slab rates are different in both years, this may lead to higher tax dues. Thus, the Income Tax Act allows relief u/s 89(1) to sav...

Section 89 of the Income Tax Act, of 1961 provides relief to taxpayers who have received arrears of salary or pension. This section allows such taxpayers to distribute the arrears over the relevant years and pay tax in the respective years in which the income would have been received. Let’s take a closer look at this section and how it can benefit taxpayers. Table of Contents • • • • • • • • Background: Salary and pension arrears are payments that are received by an employee or a retiree in a lump sum for a previous period or years. This often happens when there is a delay in receiving salary or pension due to administrative issues or disputes. Since the arrears are paid in a lump sum, the taxpayer can end up in a higher tax bracket and pay more tax than they would have if the payment was received in the relevant year. Section 89 Relief: To address this issue, Section 89 provides relief to taxpayers by allowing them to calculate their tax liability as if the arrears had been received in the year(s) to which it relates. The taxpayer can then claim relief for the excess tax paid in the relevant year(s) in which the arrears were received. This can be done by filing Form 10E with the Income Tax Department. The relief provided under Section 89 applies to all employees and pensioners who receive arrears, whether they are from the government or private sector. It is important to note that relief is not available for arrears of family pensions or the amount of gratuity received. C...

CBDT notifies Canada, United Kingdom of Great Britain, Northern Ireland and United States of America under section 89A of the Income-tax Act, 1961 vide Notification No. 25/2022- Income Tax Dated: 4th April, 2022. MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) Notification No. 25/2022- Income Tax New Delhi, the 4th April, 2022 S.O. 1568(E).—In exercise of the powers conferred by section 89A of the Income-tax Act, 1961 (43 of 1961), the Central Government herby notifies the countries mentioned in column (2) of the Table given below as a “notified country” for the purposes of the said section, namely: TABLE Sl. No. Name of Country (1) (2) 1. Canada 2. United Kingdom of Great Britain and Northern Ireland 3. United States of America 2. This notification shall come into force from the date of its publication in the Official Gazette. [Notification No. 25/2022/F. No. 370142/7/2022-TPL] NEHA SAHAY, Under Secy. (Tax Policy and Legislation Division)

CBDT vide Notification No. 25/2022 dated 04.04.2022 notified ‘Canada’, ‘United Kingdom of Great Britain & Northern Ireland’ and ‘United States of America’ as notified countries for the purpose of section 89A of the Income-tax Act, 1961 (‘Act’). Finance Act, 2021 introduced section 89A to provide relief from double taxation to non-resident Indians (NRIs) on money accrued in foreign retirement accounts maintained in a notified country. Section 89A provides that the income of a specified person from ‘specified account’ shall be taxed in such manner and for such year as may be provided by rules and also defines the expressions “specified person”, “specified account” and “notified country”. It provides relief from taxation on income from a ‘retirement benefit account’ maintained in a notified country . In this context, CBDT has notified ‘Canada’, ‘United Kingdom of Great Britain & Northern Ireland’ and ‘United States of America’ as notified countries for Section 89A of the Act. CBDT has also notified Rule 21AAA and Form 10-EE to claim the relief under section 89A by an NRI in respect of income from foreign retirement funds vide Read the full text of Notification No. 25/2022 dated 04.04.2022 on Notified Country under section 89A MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 4th April, 2022 S.O. 1568(E). —In exercise of the powers conferred by section 89A of the Income-tax Act, 1961 (43 of 1961), the Central Government her...

Amended and updated notes on section 89A of Income Tax Act 1961 as amended by the Finance Act 2022 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to relief from taxation in income from retirement benefit account maintained in a notified country. Recently, we have discussed in detail In this article, you will learn detail of the provisions of section 89A of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India. Section 89A: Relief from taxation in income from retirement benefit account maintained in a notified country Where a specified person has income accrued in a specified account, such income shall be taxed in such manner and in such year as may be prescribed. Explanation: For the purposes of this section,–– (a) “ specified person” means a person resident in India who opened a specified account in a notified country while being non-resident in India and resident in that country; (b) “ specified account” means an account maintained in a notified country by the specified person in respect of his retirement benefits and the income from such account is not taxable on accrual basis but is taxed by such country at the time of withdrawal or redemption; (c) “ notified country” means a country as may be notified by the Central Government in the Official Gazette for the purposes of ...

The Finance Act, 2021, inserted a new Section 89A in the Income Tax Act, 1961 (ITA), to provide relief to residents who have income from foreign retirement benefits accounts. A few countries impose tax on income from overseas retirement benefits accounts on a receipt basis. However, the amount withdrawn from such an account is chargeable to tax on an accrual basis in India. Thus, taxpayers were facing difficulties in claiming the foreign tax credit because of the mismatch in the year of taxability. Similarly, claiming the Double Tax Avoidance Agreement (DTAA) benefits was also a challenge in such a situation. Non-resident Indians (NRIs) who chose to settle in India after retirement permanently would usually face this issue. For example: An individual worked with a petroleum giant in the UK for 20 years. He was a non-resident of India till the Financial Year (FY) 2020-21. He contributed to a retirement benefits account in the UK while he was a non-resident of India. In FY 2021-22, he returned and became a resident of India for FY 2021-22. As he was an NRI, income accrued to his retirement benefits account up to FY 2020-21 is not taxable. However, for FY 2021-22, he is a resident of India. The accruals in retirement benefits accounts in the UK are taxable in India. On the other hand, income from the retirement benefits account is taxable in the UK on a receipt basis (year of receipt). Considering that no tax was paid in the UK in FY 2021-22 (from January to March), he is not...

• • • • • • • What is arrears of Salary? Arrears of Salary refers to any outstanding due of the previous period paid later on in a different assessment year. Further, salary may have been revised but increments can be paid at a later date or increment could be revised retrospectively. Therefore, in such cases, the differential amount paid in the subsequent period is known as salary arrears. The employer mentions it separately in the salary slips and part B of Taxability of Salary Arrears Arrears of salary is treated as salary income in the ITR. They are taxable in the year of receipt. However, the taxpayer may be worried about paying taxes at a higher rate because of a higher tax bracket in the year of receipt or due to a change in the applicable For Example: Arjun’s salary is INR 50,000 per month. His employer raised the salary to INR 60,000 per month in April 2020 effective from March 2020. Since the salary for March 2020 would already be paid, the additional INR 10,000 is paid in April 2020. This is called Salary Arrears. Find the best plan Explore Relief under Section 89(1) A taxpayer receiving any portion of the salary in arrears or in advance or receiving profits in lieu of salary can claim relief under Sec 89(1) of the Income Tax Act. If the total income of a taxpayer includes any past salary paid in the current financial year and the tax slab rates are different in both years, this may lead to higher tax dues. Thus, the Income Tax Act allows relief u/s 89(1) to sav...

CBDT vide Notification No. 25/2022 dated 04.04.2022 notified ‘Canada’, ‘United Kingdom of Great Britain & Northern Ireland’ and ‘United States of America’ as notified countries for the purpose of section 89A of the Income-tax Act, 1961 (‘Act’). Finance Act, 2021 introduced section 89A to provide relief from double taxation to non-resident Indians (NRIs) on money accrued in foreign retirement accounts maintained in a notified country. Section 89A provides that the income of a specified person from ‘specified account’ shall be taxed in such manner and for such year as may be provided by rules and also defines the expressions “specified person”, “specified account” and “notified country”. It provides relief from taxation on income from a ‘retirement benefit account’ maintained in a notified country . In this context, CBDT has notified ‘Canada’, ‘United Kingdom of Great Britain & Northern Ireland’ and ‘United States of America’ as notified countries for Section 89A of the Act. CBDT has also notified Rule 21AAA and Form 10-EE to claim the relief under section 89A by an NRI in respect of income from foreign retirement funds vide Read the full text of Notification No. 25/2022 dated 04.04.2022 on Notified Country under section 89A MINISTRY OF FINANCE (Department of Revenue) (CENTRAL BOARD OF DIRECT TAXES) NOTIFICATION New Delhi, the 4th April, 2022 S.O. 1568(E). —In exercise of the powers conferred by section 89A of the Income-tax Act, 1961 (43 of 1961), the Central Government her...

Section 89A of the Income Tax Act, 1961 was introduced by the Finance Act, 2020, and is effective from April 1, 2020. This section provides relief to taxpayers who have opted for the new tax regime introduced in the same Finance Act, but have pending claims or returns from the previous tax regime. Under the new tax regime, taxpayers have the option to opt for lower tax rates but are required to forego certain deductions and exemptions available under the previous tax regime. This led to a situation where some taxpayers, who had pending claims or returns under the previous tax regime, were unable to avail of the benefits of those claims or returns. Section 89A was introduced to address this issue and provides relief to taxpayers who have pending claims or returns from the previous tax regime. The section allows such taxpayers to claim the benefits of their pending claims or returns in the year in which they opt for the new tax regime. The relief under Section 89A is available to taxpayers who have opted for the new tax regime and have a pending claim or return under any of the following provisions of the Income Tax Act: Section 10(5) – Leave travel concession Section 10(13A) – House rent allowance Section 10(14) – Special allowances or benefits Section 10(17) – Pension received by a family member of a deceased employee Section 24(b) – Interest on housing loan Section 32 – Depreciation Section 32AD – Investment in new plant or machinery in notified backward are...