Provision of credit of relief provided under section 89

Section 89 of the Income-tax Act contains provisions for providing tax relief where salary, etc. is paid in arrears or in advance.

The existing provisions of section 140A, section 143, section 234A, section 234B and section 234C contain provisions relating to computation of tax liability after allowing credit for prepaid taxes and certain admissible reliefs, credits etc. However, the relief under section 89 is not specifically mentioned in these sections, which is resulting into genuine hardship in the case of taxpayers who are eligible for this relief.

In view of the above, it is proposed to amend section 140A, section 143, section 234A, section 234B and section 234C so as to provide that computation of tax liability shall be made after allowing relief under section 89.

These amendments will take effect retrospectively from 1st April, 2007 and will, accordingly, apply in relation to the assessment year 2007-08 and subsequent assessment years.

[Clauses 42, 43, 52, 53, & 54]

 

 

 

Relief under section 89 to be included in tax computation, making amended computation provisions effective retrospectively for affected assessment years. Proposed amendments require that tax liability be computed after allowing the relief under section 89, so that existing computation and interest provisions explicitly accommodate credit for this relief; the amendments operate retrospectively and apply to earlier assessment years to address hardship for eligible taxpayers.