Rule 73 - Relief under section 157(1), when salary is paid in arrears or in advance, gratuity, etc. Form 39 (old Form 10E)

73. Relief under section 157(1), when salary is paid in arrears or in advance, gratuity, etc.–(1) Where, the total income of an assessee for any tax year (referred to as the relevant tax year in this rule) is assessed at a rate higher than the rate at which it would otherwise have been assessed, on account of receipts in relevant tax year as specified in column B of the following Table, the relief admissible under section 157(1) shall be as specified in column C thereof: Table Sl.No. Receipts Relief A B C 1. Any portion of salary received in arrears or in Relief = A-B, if A exceeds B, where – advance or, any portion of family pension A=C-D; received in arrears (herein referred to as the B=Aggregate of E; ―additional salary‖ or ―additional family E=F-G pension‖, as the case may be). and the computation of relief shall be carried out in the following steps. Step-1: Where the additional salary or additional family pension relates to one or more tax years, the tax years to which the additional salary or additional family pension relates and the amount relating to each such tax year shall first be ascertained. Step 2: Calculate A=C-D, Where,– C = tax on total income of the relevant tax year; D= tax on total income, as reduced by the additional salary or additional family pension, as if the total income so reduced were the total income of the relevant tax year; and A = tax on the additional salary or additional family pension for the relevant tax year. Step-3: Calculate E = F - G, Where,– G = tax payable in respect of the total income of each tax year ascertained in Step-1; F= tax payable on the total income of such tax year as increased by the amount relating to such tax year as ascertained in Step-1, as if the total income so increased were the total income of that tax year; and E= tax on the additional salary or additional family pension for each tax year ascertained in Step-1. Step-4: B = aggregate of tax on the additional salary or additional family pension. Calculate ―B‖ to be the total of tax on the additional salary or additional family pension, which was ascertained as E in Step 3 for all tax years ascertained in Step 1. 2. Gratuity received in respect of past services Relief = G x (R1-RAvg), if R1 exceeds R Avg extending over a period of greater than or equal Where,– to five years but less than fifteen years. G = gratuity received in the relevant tax year R1 = average rate of tax on the total income including gratuity amount received in Y1: RAvg = ( R2+R3)/2; R2 = average rate of tax on the total income for Y2 as increased by one-half of the gratuity received, as if the income so increased were the total income of that tax year R3= average rate of tax on the total income for Y3 as increased by one-half of the gratuity received, as if the income so increased were the total income of that tax year; Y1 = relevant tax year, Y2= tax year immediately preceding Y1, and Y3 = tax year immediately preceding Y2. 3. Gratuity received in respect of past services Relief = G x (R1-RAvg), if R1 exceeds R Avg. extending over a period of not less than fifteen Where,– years. G = gratuity received in the relevant tax year; R1 = average rate of tax on the total income including gratuity amount received in Y1; RAvg =( R2+R3+R4)/3; R2 = average rate of tax on the total income for Y2 as increased by one-third of the gratuity received, as if the income so increased were the total income of that tax year R3= average rate of tax on the total income for Y3 as increased by one-third of the gratuity received, as if the income so increased were the total income of that tax year; R4= average rate of tax on the total income for Y4 as increased by one-third of the gratuity received, as if the income so increased were the total income of that tax year; Y1 = relevant tax year; Y2 = tax year immediately preceding Y1; Y3 = tax year immediately preceding Y2; and Y4 = tax year immediately preceding Y3. 4. Compensation received from the employer or Relief = C x (R1-RAvg), if R1 exceeds R Avg. the former employer at or in connection with the Where,– termination of employment after continuous C = compensation amount received in the relevant tax service for not less than three years year; and where the unexpired portion of term of R1 = average rate of tax on the total income employment is also not less than three years including compensation amount received in Y1; RAvg =( R2+R3+R4)/3; R2= average rate of tax on the total income for Y2 as increased by one-third of the compensation amount received, as if the income so increased were the total income of that tax year; R3= average rate of tax on the total income for Y3 as increased by one-third of the compensation amount received, as if the income so increased were the total income of that tax year; and R4= average rate of tax on the total income for Y4 as increased by one-third of the compensation amount received, as if the income so increased were the total income of that tax year; Y1 = relevant tax year, Y2 = tax year immediately preceding Y1, Y3 = tax year immediately preceding Y2, and Y4 = tax year immediately preceding Y3 5. Commutation of pension received Relief = P x (R1-RAvg), if R1 exceeds R Avg. Where – P = amount of commutation of pension; R1 = average rate of tax on the total income including amount of commutation of pension received in Y1; RAvg =( R2+R3+R4)/3; R2= average rate of tax on the total income for Y2 as increased by one-third of the amount of commutation of pension received, as if the income so increased were the total income of that tax year; R3= average rate of tax on the total income for Y3 as increased by one-third of the amount of commutation of pension received, as if the income so increased were the total income of that tax year; and R4= Average rate of tax on the total income for Y4 as increased by one-third of the amount of commutation of pension received, as if the income so increased were the total income of that tax year; Y1 = relevant tax year; Y2 = tax year immediately preceding Y1; Y3 = tax year immediately preceding Y2; and Y4 = tax year immediately preceding Y3. (2) In case of any other receipts, the Board may, having regard to the circumstances of the case, allow such relief as it deems fit. (3) To claim relief under section 157(1), the assessee shall furnish the particulars specified in Form No. 39 on or before the due date specified under section 263(1)(c). (4) Where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association or body, is entitled to relief under section 157(1), he may furnish the particulars specified in Form No. 39 to the person responsible for making the payment referred to in section 392(1).