INCOME TAX ON INTERIM RELIEF
Referring to the post of Mr R K Viswanathan,I do not think that the provisions of Sec 89 of I-T Act will apply as the amount paid by LIC is in the form of interim relief in compliance with the order of the Supreme Court.
The amount does not constitute arrears of pension for the past periods in the strict sense of the term.
It is premature to presume their representing arrears of past pension when the pension amount has not been revised.
The amount will just be treated as an additional cash payment for the financial year and clubbed with the income of the year.
Perhaps if the final judgment goes in favour of the pensioners,when the arrears are paid for identified past periods, it has to be ascertained whether the amount of interim relief already received can be deducted from the taxable income in the financial year in which the arrears are paid.
In that event, Sec 89 benefit can be availed of for the past financial years for the arrears paid in that year if the retiree so desires.The views of our chartered accountant fellow pensioners will be welcome.
Greetings.
C H Mahadevan