WE
ARE ENTITLED TO RELIEF ON INCOME TAX ON OROP-ll
& lll , 7 CPC & PMR ARRs PAID IN THE
CURRENT FY - (2016-17) TO THE EXTENT OF LESSER INCOME TAX THAT WE
WOULD HAVE PAID ON THESE ARRs HAD THEY BEEN PAID TO US DURING THE PREVIOUS
YEARS THAN WHAT WE WILL PAY TODAY.
During the last year our team brought out for
you a post on this very subject, where in we had given a "PRIMARY SCHOOL
SOLUTION" to work out the Relief on Income Tax on such like Arrears and to
prepare and submit FORM 10-E on line while e-filing your ITR under Sec 89(I) of
the IT ACT. This post has benefitted a large number of pensioners in saving
their Income Taxes in thousands. Do read the old post which had detailed
explanations on the method. The webpost is accessible at the web page - http://signals-parivaar.blogspot.com/2016/05/relief-on-income-tax-for-arrears.html
This endeavour
helped a large number of officers who made efforts to DO IT YOURSELF in
claiming their relief, the max being Rs 80,000/- and lowest as much
as Rs 1650. We received many encouraging words from them.
Some Veterans even resorted to filing their REVISED RETURNS to claim the IT
relief after reading our web-post.
Last year we were also informed by veterans they had seen many CAs
referring to our Web Site, while filing returns for their customers
and charging them something like Rs 2500/- where as the same could have, well
been done by them on their own based on the simple primary school method
given in our post. It was also reported by some Veterans from
Meghalaya, Tamil Nadu and Rajasthan that some Cyber Cafe
walas charged as much as Rs 50/- to Rs 100/- for providing information
on Pension Entitlements and OROP referring to our blog site.
We are thus encouraged to bring out this post
which covers the arrears paid during FY 2016-17 on OROP. 7 CPC and Arrears on
DL 33 Yrs Rule (PMR CASES)
WHY THE RELIEF
UNDER SEC 89(1).
Before we proceed
further let us understand the principle under which such a relief is entitled.
You are receiving these arrears late by a year or more as the Govt could not
pay you these amounts during those earlier years for some reasons.
"HAD THESE
ARREARS BEEN PAID DURING THE PREVIOUS YEARS YOU WOULD HAVE PAID TAX AS PER
YOUR LESSER "TOTAL TAXABLE INCOME (T.I)" AND LOWER IT RATES FOR
THAT YEAR, THAN TODAY, WHILE YOU FALL IN THE 30% BRACKET. THIS AMT OF
LESSER TAX AS COMPARED TO THE CURRENT YEAR IS YOUR RELIEF UNDER SEC
89(1)".
Important Note
-- As a thumb rule 'Other than PMR cases' in case, they were taxed at the same
slab (suppose 30%) in the previous two Financial Years ie 2014-15 and 2015-16
as they may be Taxed during the current year "No Relief" is
likely to accrue. However the PMR cases will certainly have adequate Relief
available to then which could be over One lakh of rupees in some cases.
Let us now proceed to deal with the arrears as received
during the last Financial years i.e. FY 2016-17. During this
financial year mainly following arrears were received by us :-
* Second Installment of OROP.
* Third Installment of OROP.
* 7 CPC Arrears.
* PMR CASES (DL 33 Yrs Rule) - Arrears.
HOW TO ACCOUNT FOR OROP INSTALMENTS
1. Total Arrears on OROP
so accrued wef Jul 2014 till Feb 2016, when the OROP was
paid were divided into four portions. The FIRST one was paid
in Feb 2016 (FY 2015-16) , the SECOND one in Aug 2016 (FY
2016-17) and the THIRD too has been paid in March 2017 (FY 2016-17) in most
cases. These arrears infect pertain to the period starting from 01 July
2014 to 31 Dec 2015 for Relief purposes. These can be easily
split for two years ie FY 2014-15 and 2015-16 to claim relief.
2. One needs to know the increase/Hike in basic pension
on OROP from the 6CPC figs are required to proceed further. The Table No, 1 on
the right gives these figures for various ranks with full QS. In addition one
also needs to know whether the relief was claimed on first installment in
the last IT-Return for FY 2015-16 (Ass Yr 2016-17), showing it as
arrears of the previous FY 2014-15. If not then the same was
obviously included in the Total Taxable Income for the FY 2015-16 and tax paid.
3. In order to split the arrears we have derived
the magic MF (Multiplication Factors) on the hike on basic pension to arrive at
various figures for distribution of these OROP arrears to earlier FYs for
all ranks. The hike will be different for different pensioners but the MF
remains the same. Please see the calculations as below as your guide:-
* FY 2014-15 (MF=18.81) : for a Lt Col
the increase is 34765 minus 26265 = 8500 as can be seen in the table here. The
arrears thus work out for the FY 2014-15 as = 8500X18.81 = Rs 159885/-.
Note : In case one had
shown the first installment during this FY and had claimed the relief
under Sec 89(1) the same be deducted from the above total of Rs 159885. The
remaining amt still pertains to this FY and can be claimed for relief
from the second installment.
* FY 2015-16 (MF - 26.28) ; Here again for a Lt Col the arrears will be = 8500X26.28 = Rs 223380/-
Note : The arrears on OROP received during the current Financial Year
can accordingly be claimed for previous arrears if beneficial. The ready
reckoner for various ranks is placed below:-
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TABLE No, 2 SPLITTING OF OROP ARREARS
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NOTE :
1. These figs are based on OROP having been received after Mar -
2016. However individual cases should work out differently in case the OROP had
been started earlier. The relief will be permitted on the above figures since
wef 01 Jan 2016, the 7 CPC had been implemented and arrears paid later in 2016.
2. The first installment of OROP was paid mostly in Mar 2016 ie during the FY
2015-16 but actually pertained to FY 2014-15. In case the officers did not
claim any relief on IT on OROP First Installment last year , they can
now show the Second Installment and a portion of the third installment as the
Arrears pertaining to FY 2014-15 and tax relief worked out and claimed..
3.
However in case this instl was shown for FY 2014-15 in last
years' ITR for tax relief, then the balance arrears ie a portion of
Second installment still pertains to FY 2014-15. In this case
portion of Second installment which may be worked out in individual cases can
still be treated as arrears for FY 2014-15 and relief claimed. The remaining
portion will fall as arrears for FY 2015-16. Your own figures will vary
depending upon the hike in OROP
ARREARS
OF 7 CPC SCALES.
1. The 7 CPC was implemented wef
01 Jan 2016 while we all were in the receipt of basic scale of OROP Pension
plus DR @ 125%. The 7 CPC award for every one for the time being has been fixed
at your pension as on 31 Dec 2015 multiplied by a factor of 2.57. The Dearness Relief on this under 7 CPC
was NIL from Jan to Jun 2016 while it has been 2% from Jul to Dec 2016
and 4% from Jan 2017 onwards. It is thus evident that
arrears received on 7 CPC award mostly pertain to last FY-2016-17,
leaving those for Jan to Mar 2016 which pertains
to FY 2015-16 for claiming relief under Sec 89(1). One can thus easily
know this portion of the arrears which pertains to the last year
based on your basic OROP scale as on 31 Dec 2015.
2. * FY
2015-16 (MF = 0.96) : Multiply the OROP basic pension with
this MF to get the arrears. eg Lt Col :: 34765X0.96= 33374.
MF is constant and can also be used for all.
3. To help our readers we are giving a ready reckoner below rank wise
Arrears for three months pertaining to FY 2015-16 to work out and claim rebate.
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TABLE No, 3
SPLITTING OF ARREARS ON 7 CPC
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NOTE : Add these
arrears to OROP arrears as worked out above for the FY 2015-16
for claiming relief.
1. We received many mails from
pensioners specially from Indian Air Force and Indian Navy who took PMR and are
now entitled to arrears received during the Financial Year,
asking us to help them with relief by doing special web post for the
treatment of arrears received by them on DL33Yrs Rule. This post is in response
to their desires.
2. Most of the PMR
Pensioners have received these arrears before 31 Mar 2017. They must have
already checked the correctness of their arrears based on many tables which had
been circulated on mails by many officers. These arrears pertain to the period
from 01 Jan 06 to 30 Jun 2014, as such the total arrears received on
this account should first be broken down Financial Year wise ie
to the years they pertain.
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TABLE No, 4 SPLITTIMG OF PMR ARREARS
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3. The total PMR
arrears received by various officers depend on the hike in the basic
pension as affected by the provisions. They should refer to PCDA(P)
Circular No 500, (Circular No 24 – Medicos) and check the hike in
their basic per month pension. this be noted.
4. One can split
the total arrears either by taking into account the monthly hike (using MF as shown under
Coln 'c' of the table No.4 placed alongside - in
this example we have taken Rs 2270/- as the monthly hike in basic pension
amounting to total arrears received as Rs 325652/- .
5. We can also use
percentage methid by multiplying the total arrears received with yearly percentages given under Coln 'e' of
the table above. Coln 'f' thus gives the breakdown Financial year wise for
calculations to arrive at the relief.
DATA
NEEDED TO PROCEED
We therefore need to know the following data
before proceeding further for the treatment of arrears along with the arrears
of OROP and the 7 CPC :-
(a) . Breakdown of arrears received on PMR, OROP and 7 CPC as
described above.
(b) The“TIs” for the Fin Yrs from
2005-06 on wards till Fin Yr 2015-16, to be noted from the ITRs of previous
years correctly. Relief claimed earlier during the previous year for arrears on
Enhanced Pension, OROP Etc for the each previous year. (d)
Form 10-E (Table) of the previous year where the relief on earlier
arrears had been claimed in ITRs.
6. We are now ready to prepare
the Form 10-E for which a Primary Class methodology is given in
our last years blog post. This form will give you the relief
you are entitled now.
MAGICAL
CONSTANTS - MULTIPLICATION FACTORS.
In order to help
our readers in their calculations of pension, arrears etc these Mathematical
Constants, we call them MFs (Multiplication Factors) have been derived from
complicated tables and calculations so as to bring the calculation of arrears
for various periods depending on the Rates of Dearness Relief prevailing from
time to time in this post, to a PRIMARY SCHOOL MATHS problem.
The MFs for various periods are
listed below, you donot have to refer any charts of the DA rates or the
calendar just multiply the hike by the MF for the period and you get the amount
of the arrears, so simple isn't it.
a. 01 Jan 06 to 30
Jun 09 - 46.02
b. 01 Jul
09 to 23 sep 12 - 75.62.
c. 01 Jan 06 to 23 Sep
12 - 103.64
d. 24 Sep 12 to 31 Dec
15 - 78.08
e. 01 Jan 06 to 30 Jun
14 - 143.404
f. 01 Jul 14 to 31 Dec
15 - 38.34
g. 01 Jan 16 to 29 Feb
16 - 4.50 (DA 125%)
Use these MFs for calculating your arrears for
the periods shown, The error which may be there is only an ignorable
fraction in its percentage.
LIVE
EXAMPLE - LT COL XY ZULU (PMR 22.5 YRS QS)
you will need details in respect of your pension and
arrears before you proceed further to file your ITR and claiming relief similar
to what is explained in the succeeding live example.
Let us now work for our
friend Lt Col (TS) XY Zulu, his DATA being:-
a. Date of Birth = Apr 1947, (Hence becomes Sr Ctz
wef in FY 2011-12)
b. PMR after 22.5 yrs of service,
c. Initial pen fixed as on 01/01/06 = Rs
21417/- against Rs 25700/-.
d. Pen under Cir No 500 =Rs 21888/- against
full Rs 26265/- wef 23/09/12 later made
applicable vide Cir No 548 wef 01/01/06.
e. OROP entitled wef 01/07/14 8500/mth = Rs 32428/- against full QS OROP of Rs 34765/-, HIKE
of rs 8500 per month.
f.
Pension fixed under 7 CPC (2.57 times) = Rs 83340/- wef 01/01/16.
g. Total Arrs recd = Rs
892437/- along with his pension making his Total Taxable Income (TI) after
all deductions to Rs 1907517/-.
h. Income Tax on Rs 1907517/- = Rs 4,04,023/- if relief not claimed)
j. Sub-Details of Arrears recd in FY
2016-17 totaling as Rs 892437/- :-
*
Sec installment of OROP = Rs116823/-
* Third Installment of OROP = Rs 116823/-
* 7 CPC Arrears for
Jan, Feb & mar 2016 = 31131/-
* PMR Arrears = Rs
627661/- .
LET US SEE IF OUR FRIEND CAN SAVE ON HIS INCOME TAX BY AN AMT OF OVER Rs ONE LAKH.
Summary
of Arrears Received During Current Year :-
a. OROP-ll
& OROP-lll each = Rs 116823/- (TOTAL =233646)
b. 7 CPC = Rs
31130/- FY 2015-16
c. PMR = Rs
627661/- for Pd Jan-06 to Jun-14
d Normal Pension 2016-17 =
1015080 & Arrs above = 892437/-
TOTAL
= 1907517/-
These arrears are to be further be split
into year wise to which they pertain in accordance with the method explained
above as under:-
a. OROP FY - 2014-15 - HIKE(10540)*18.81= Rs 198258/- (We
presume that First Installment
of Rs 116823 was claimed for relief FY 2014-15 thereby remaining Rs 81438/- out of the two installments amounting
to Rs 233646/- will be claimed again this year.
b. OROP FY - 2015-16 - HIKE(10540)*26.88= Rs 276991/-. Of this only
two installments amounting to Rs 233646 were received in current year as such
they less Rs 81438 ie Rs 152208/- be
shown against FY 2015-16.
c. 7CPC FY -
2015-16 - OROP(32428)*0.96 = Rs 31130/-.
d. PMR Arrs Ttl HIKE (26265-21888)*143.404 = Rs 627661/-.
NOTE - The PMR arrears as above should now be broken down FY wise by method
of percentage as explained above under breakdown (TABLE No, 4). The figs
worked out are shown below. You are now ready to proceed for knowing the relief
if any. Red Figs are inserted in the final chart (TABLE
No, 6).
BREAKING DOWN OF PMR ARREARS (TOTAL = Rs
627661) FY wise
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TABLE No, 5 -SPLITTING OF PMR ARREARS FOR COL
ZULU
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Now prepare your preliminary data chart based
on above calculated figures as per under mentioned format (TABLE No, 6). PL
DONOT BE AFRAID OF MANY COLNS IN THIS TABLE, SPECIALLY IN CASE YOU DID NOT
CLAIM ANY RELIEF EARLIER, IN THE END you will only need two columns H
& M to proceed further. Fill the above details and your T.I's for the
previous years as per your ITRs filed in earlier years in the following
chart/table (TABLE No, 6):-
TABLE No, 6 (YOUR DATA)
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TABLE
NUMBE - 6 - YOUR DATA CHART
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NOTE :: Ignore the columns
of earlier claims ie coln "D" to "G" in case not claimed ,
here "C" & "H" will have same values.
You are now ready to
prepare your FORM 10-E which will be submitted on line while filing your
return. In this you need to calculate Income Tax year wise on the
Original/Modified Taxable Incomes with and without the Arrears incl the current
year. For this purpose to your convenience we have placed here the income tax
rates and the slabs pertaining to the earlier years in Table No, 7.
FORM 10 E -Preparation and Submission
While the relief amount will be
reflected by you in the appropriate field in the ITR Form where the amount of
relief will get deducted from the total Tax, the pensioners are required to
submit FORM 10 E on line in support of their relief claimed from the arrears.
This form is of two pages as shown below
(TABLES 8, 9 & 10).
Page one is the summary
and verification from the pensioner.
Page two is "Annx
-1" which contains Particulars and Table A which simply tabulates
the calculations made by you on piece of paper as mentioned earlier. These are
shown below in TABLES 8, 9 and 10 reflecting the case of Lt Col
Zulu.
Let us
help you with one of the years say FY 2011-12 for Table A of the Form 10E, you
will be able to work for other years without any hassle.
Till FY 2010-11 Col Zulu (Apr 1947 born) was under 65 yrs of age as
such not yet a senior citizen. The Sr Ctz age was reduced to 60 yrs wef
FY 2011-12. Our friend therefore is Sr Ctz for Tax purposes wef FY 2011-12 as
such his Income Tax slabs & rates for the FY 2011-12
applicable will be as can be seen in the Table No, 7. :-
No Tax upto 2.5 Lakh of TI,
10% 2.5 L to 5 Lakh,
20% 5 to 8 Lakh &
30% >8L
The T.I (Table 6) for FY 2011-12 is Rs 464996/- and the arrs of assigned
for this year are 82988. Now calculate the Income Tax first for Rs 464996/-
(w/o arrs) which works out to Rs 22145/- and for Rs 547984/- ie with arrs
(464996+82988= 547984) tax works to be Rs 35635/- ie Rs 13494/- more
than what it is without arrears. These values
are inserted in Table 'A' of Annx-1 of Form 10 E (TABLE-9) placed
below.
Similarly work out the Taxes and difference for
all other years and complete the Table A of Annx-1. Once done You
have won the battle for yourself.
INCOME TAX RATES - TABLE No, 7
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TABLE
NUMBER 7 - INCOME TAX RATES
FORM 10-E - PAGE 1
This is the
beginning part of the form 10 E which will appear on line once you ae in the
process of on line submission of this form. Here one only needs to
specify the Total Arrears being assigned for earlier year. This can be even
less than the total arrears received by you as you are at liberty to claim
for arrears which are more beneficial to you.
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TABLE
NUMBER - 8 - FORM 10 E PAGE 1
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TABLE 'A'- Part
of Annex 1
This table is by far the most important showing the
difference in income tax that you would have paid for all the previous years
for the arrears had they been received by you during the previous year rather
than the current year. The details of working out has been explained above. The
figures given in this table by you must be accurate, since these are checked in
the Dept with your earlier ITRs.
Prepare this \Table and use the same for on line completion while submitting
the Form 10-E along with your ITR.
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TABLE
NUMBER - 9 - TABLE A OF ANNX-1 OF FORM 10-E FOR ON LINE SUBMISSION
SLABS TAKEN--
In
the above Form for the years shown are the Financial Years . The subject
assessee became senior citizen during the FY 2011-12 as such his calculations
from the said FY on wards are based on slabs prescribed for
a Senior Citizen and calculations before 2012-13 are for MALE Assessee.
Once the above table has been made, your
battle stands won by you, what remains is minor completion of columns of
Annx-1 on line as below.
ANNX -
1 OF FORM 10-E , GIVING THE AMOUNT OF RELIEF UNDER SEC 89(1) - TABLE NUMBER
-10
Here on Table- 10 we insert the income (1015080) and
the arrears (892437 ie Only up to the extent being assigned to previous
years) of current year. The total becomes 1907517 (Tax Calculated on this
amount is Rs 404023/-) while the Tax on income w/o arrs ie Rs 1015080/-
is calculated as 128260/- . Hence the diff in Tax on income with and
w/o arrs for the current year (Ass Year 2017-18) is equal to Rs 275763/- .
Deduct from this the total difference as calculated in Table 'A' (table No,
9) to obtain the amount of relief which is Rs 1,03,418/- a substantial
amount for Zulu to take his family for a Hoilday.
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TABLE
- 10 - ANNX 1 OF FORM 10-E FILLED UP FOR ON LINE SUBMISSION
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ON LINE UTILITIES -
There are many on line applications available launched by
various establishments which file ITRs on behalf of their clients on payment.
They are simple to use and need only filling up the arrears spitted as per past
years and the applications does all calculations for you and also produces Form
10 E. One can make use of them as well if one can however care should be taken
that the calculations are for the age of the assessee. Any mistake if made in
the Form the responsibility will be of the assessee and the Income Tax
Department may not admit the Relief because of these errors. It will be
worthwhile to recheck the outputs by manually calculating as well.
E-FILING OF ITR AND ON
LINE SUBMISSION OF FORM 10
ITR - First after you have calculated your data you
may prepare your ITR for efiling based on On line Forms ITR-1 or as applicable.
These forms has a field to insert the Total amount of Relief claimed. This
amount gets reduced from the over all tax liability.
FORM - 10 E - The
E-filing site https://incometaxindiaefiling.gov.in caters for on
line filling of the form and submission. One can prepare the form on line and
save it as draft while you are partially ready and finalise later. After you
have logged in with your PAN number and password to your account with them
Click on "e-File" (Refer to following screen shot) select
prepare and submit Form on line from drop down, the screen as below will
appear. Put in details and continue thereafter as per instructions which pop
out,
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FIGURE NUMBER-11 - SCREEN SHOT OF E-FILING
SITE
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NOTE:- Once again its a simple
affair, the form can be opened on line on e-filing site of the IT Dept
after your own logging in, filled up with your data as worked above page wise
page and submitted on line. You get a confirmation of submission.
However please note that the years as they appear there on their site on
line are assessment years and not Fin Years.
NOTE - We will appreciate your inputs on the
above POST.
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YOUR OBSERVATIONS AND
COMMENTS PLEASE
Dear Veterans,
1. We at
Signals-Parivaar Portal are ordinary people, as such, do heavily bank
upon inputs from our readers on issues concerning us all. Kindly do add,
comment, point out errors or give your observations on this post or
any other post, which we will much appreciate. Our sole aim is to
improve the posted contents for the benefit of the veterans community at large.
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with other veterans or their organisations.
3. Kindly post your
comments and observations under the comments on this post, we will much
appreciate your contribution in this regard.
4. In order to avoid
spam and unwarranted or mischievous posts, only such entries will get published
where the Veteran has given his/her RANK, NAME & EMAIL ID at the end
of his/her text. You will agree that we must know as to with whom we are
communicating. We regret that your comments
will not be published in the absence of your mail ID rank and Name.
5. We will do our best
to post our response or get in touch with you on e-mail as quickly as possible
after getting the facts vetted from offrs, JCOs and men who are more
knowledgeable on the particular subject.
With best wishes
Sincerely yours,
Brig Narinder Dhand
(Veteran)
