How do arrears impact the tax calculation?

Modified on Thu, 28 Dec, 2023 at 4:10 PM

Arrears of salary is treated as salary income in the ITR (Income Tax Return). They are taxable in the year of receipt. To reduce the additional tax burden from arrears, Section 89 of the Income Tax Act has been introduced, within which if the total income of the previous year includes salary arrears, tax relief can be availed under Section 89 (1).


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