Income tax on arrears

You should show your income of the year in which it reflects in 26AS

Did you checked your 26AS?

It is advisable to consider it in the same year in which it has been considered in 26AS

You should check your 26AS and consider the income in the year in which it has been considered in 26AS.

Further, any salary arrears will be taxable in the year of receipt.

Hi,

The arrears, since it pertains to the period Sept 2016 to March 2017, will have to be offered to tax in the return for that period. However, the corresponding TDS credit will not be available to you, as it was deposited in the next year. Hence, you will have to pay tax in 2017 and in the next year you can claim refund of the tax deducted in 2018.

Trust this clarifies.

Regards,

Keerthiga Padmanabhan

M.Com., CA, LLB

Hello,

Income from salary is to be shown as to earned or received whichever is earlier. So as to your arrears are concerned you will be taxed in the year for which the income is earned and not the year in which you have received.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

As you received the arrears in June 2017, this income pertains to the financial year 2017-18 relevant to the assessment year 2018-19. The due date for the filing of your Income Tax return is 31st July 2018.

You need to include the arrears received as the income received during the FY 2017-18 and claim rebate u/s 89. The rebate u/s 89 evens out the tax liability across the years to which the arrears pertain to. Thus in your case, the tax liability will be worked out by adding the arrears pertaining to the period from Sept 16 to March 17 by adding to the existing income, declared by you. The income for the FY 2017-18 will be worked out by deducting the arrears pertaining to the FY 2016-17. Thus you will get benefited if there is any difference in tax liability due to change in slabs.

The working u/s 89 is slightly complicated, though in your case it is only for 1 year. Still I suggest that you should file the return in consultation with your CA.