Netting of recovery of pension related to previous years with commutation arrears paid during the current year

[MANIAN T V]

Excess paid pension related to previous years recovered during current year. I am a Retd Bank officer, retired in June 2013.As per the wage settlement reached between the united forum of bank employees/officers association and IBA( Indian Banks association) in May 2015 with retrospective effect from 01 Nov 2012, Pension of the officers retired on or after November 2012 was REDUCED( A Historical case). Difference in salary for 8 months related to FY 2013-14 was paid in my case in July 2015 and added to income for this FY 2015-16. Due to DA neutralization, pension after commutation was revised downwards (reduced)with retrospective effect Hence, difference in pension approx. ₹ 2600-00( in my case) per month from July 2013 to October 2015 was recovered.( Recovery was done like this, Arrears of difference in commutation (due to old basic pay & revised Basic pay) was credited to my SB account after deducting the recovery of pension for 27 months ).(i.e Recovery of pension was related to FY 2013-14 & FY 2014-15,FY 2015-16. which were already taxed by the employer were deducted from a non taxable of income of commutation arrears.). When I took up the case with HRM department I was replied as below: In respect of pension amount excess paid recovered, there is no provision in the Income Tax Act to consider it as deduction from the pension of the current year. However, any reduction of pension in respect of the current period ie., the net pension income is to be considered for tax computation. In respect of any pension excess paid in respect of any of the earlier years is equivalent to recovery of advances and hence, cannot be reduced from the current year's income. My doubt/question, How this recovery of pension related to FY 2013-14 & FY 2014-15 has to be taken while calculating Income Tax for FY 2015-16? Whether this recovery of pension related previous FY 2013-14 & FY 2014-15 can be deducted from the gross income by the tax payer at the time of filing return for FY 2015-16 as the employer has not considered as a deduction from the gross income of FY 2015-16, even though both Salary & Pension are at par as per Sec 17(1) of IT Act? Income Tax has already been charged/recovered at source for the difference amount of pension related to FY 2013-14 & FY 2014-15.( which is now recovered during FY 2015-16). Whether the assessee/tax payer can claim relief under Sec 89(1) for the recovery of pension related to FY 2013-14 & FY 2014-15? Whether the employer is supposed to furnish the details or furnish a certificate with break up for FY 2013-14 & FY 2014-15 to claim relief under 89(1) in Form 16 for FY 2015-16 as a note or as a separate certificate? Recovery of pension related to previous FY 2013-14 & FY 2014-15 were treated as pension chargeable to Income and TDS recovered. But at the time of recovery during FY 2015-16, it was treated as advance commutation paid, which was non taxable. I request Tax experts to guide me to claim relief for the Income Tax paid on the portion of pension related FY 2013-14 & FY 2014-15 by whatever name called (pension or advance commutation) I have read in this forum, the treatment of excess paid salary(related to previous financial years) in cases like salary paid by mistake, excess paid due to downgrading the basic pay with retrospective effect due to various reasons. I remember, it was mentioned that these recovery can be shown as deduction from the gross income of the current year. Why a similar treatment cannot be given to this recovery of pension also? I request TAX EXPERTS to guide me on the above, which will be helpful to many

AI Summary

Retired bank officer seeks tax relief on retroactively reduced pension under Section 89(1); employer lacks detailed documentation. A retired bank officer faced issues with pension recovery for previous financial years due to a wage settlement that reduced pensions retroactively. The officer sought advice on whether the recovered pension amounts, already taxed in previous years, could be deducted from the current year's income or claimed under Section 89(1) for relief. The employer did not provide a breakdown of the recovered amounts in Form 16, complicating the refund process. Responses advised consulting a Chartered Accountant or tax consultant for detailed guidance, as the employer should ideally document these recoveries for tax purposes.