Wednesday, September 3, 2008

Arrears to be taxed only after payment’

Statesman News Service

NEW DELHI, Sept. 3: The government today clarified that the arrears accruing from the pay hike recommended by the Sixth Pay Commission would be taxed as and when it was given and not in a lump-sum. “The income tax as due can only be deducted on the income earned in a particular year,” a finance ministry official said, refuting reports that 100 per cent tax would be collected this year even though the arrears would be split into two installments of 40 per cent this year and 60 per cent next fiscal.

Stating that no special dispensation would be made for government employees, the official said tax would be levied when a payment was made on a person’s total income that year. There would be no advance tax.

The ministry also sought to dispel the feeling that defence personnel would get a lower pay scale as compared to their civilian counterparts.

Asked about the Budget provisions, the official said the total impact in the general Budget was calculated at Rs 15,564 crore. Since all allowances are prospective and would be thus applicable from 1 September, the government would be able to sustain the pay hike this year. (Courtesy: Statesman)

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