If you have received arrears of several months, adopt these methods to save taxes, thus reducing the burden of income tax.

These tips will help you save on income tax

Has your assessment also arrived recently? Then it is possible that you have also received arrears from the last few months. After a good salary increase, you will receive a huge lump sum as arrears. In such a situation, the arrears money also goes unnoticed in income tax. Therefore, we are going to tell you some tips that will help you save on income tax.

After the salary increase, your income also increases and due to this, your tax liability also increases. It is possible that your salary has increased so much that it now falls under a new tax slab. Therefore, some provisions of the old income tax regime can help you save taxes.

Article 89 of the Income Tax Law will be useful

Many times it happens that your arrears like bonus and remaining dues from the previous financial year are also credited by the company in the current financial year. The income tax law is calculated on the amount you received in the current financial year. In such a situation, if some payments from your previous financial year have been credited this year, you will have to pay tax on that additional payment or income this year.

Then Section 89 of the Income Tax Act can help you. Yes, in such cases, as per Section 89(1) of the Income Tax Act, you can save tax on the portion of last year’s salary that has been credited to you this year. This section comes in handy on such occasions…

1. You may have received salary or family pension in the form of arrears or advances.
2. You have received gratuity money, which is exempt from income tax under section 10(10)(ii)(iii).
3. You may have received compensation when you were laid off from your job.
4. Commuted pension, which is exempt under section 10(10A)(i).

Who can make a claim under Article 89?

According to an ET report, the exemption available under Section 89 of the Income Tax Act can only be availed when your tax liability increases due to the reasons mentioned above and your tax liability is high. If you do not incur any additional tax liability, you will not get the benefit of this tax exemption. Not only this, for this you will also have to fill Form-10E. Only then you can claim the exemption under Section 89.