Time has come to file our Income Tax Return (ITR) by 31 Jul 2024.

Indian Military Veterans

Dear Sir,

*Introduction*

1. Time has come to file our Income Tax Return (ITR)  by 31 Jul 2024. So read this three page note on how to get Income Tax (IT) relief / refund when you file ITR through your Chartered Accountant (CA on 31 Jul 2024. You must have received OROP-II arrears for the period Jul 2019 to Mar 2023 in Jun 2023 as per the judgment of Hon’ble Supreme Court if you are 70 years of age and your bank or SPARSH might have deducted huge sum as income tax (TDS) when they remitted your OROP arrears. They would add the pension income of fin yr 2023-24 to OROP arrears and tax you at current tax rates which are generally higher than those of previous financial years 2019-2020 to 2023-24 to which these arrears actually belong to. Therefore you pay very high IT but you  can get IT refund when you file your ITR. The Finance Ministry has made a provision under Sec 89(I) of IT Act 1961.

2. In first reading of this long post  you may not understand much but second or third reading will make you understand how to get IT refund. You cannot get IT refund if you do not put some effort to understand this seemingly complex subject. I shall make it as simple as I can. The caveat is if you have not got any OROP arrears, then do not waste your time by going through this long email.

3. *Delay in Release of Arrears*. Arrears means income you received today which actually belongs to the past period. You know Dearness Relief (DR) for the period of January  to June in any year are released only in April of that year as it takes some time to finalise the DR rates. So are the DR for the months of Jul to Dec are released in Oct of that year. The Armed Forces Pensioners are sanctioned One Rank One Pension (OROP) once in every five years since Jul 2014. OROP-I was implemented from Jul 2014 to Dec 2015, OROP-II was implemented after five years from Jul 2019 to Mar 2023. OROP-III is due from Jul 2024 to Jun 2029. It takes some time for PCDA (Pensions) Prayagraj to work out OROP tables and get Govt approval for disbursal of arrears. Therefore, arrears are paid after more than one year of delay. The arrears was paid in one go in  Jun 2023 after delay of 45 months to (a) Gallantry Award Winners (b) Family Pensioners and (c) those who are 70 years or above in one go by 30 Jun  2023 by the judgment of Hon’ble Supreme Court. For others whose age is less than 70 years, arrears are disbursed in four instalments with last instilment to be completed by Feb 2024.

How to get IT Refund?

4. *Let us take a simple example*. Your monthly pension is say Rs 1 lakh. This does not change from Jul 2019 to Jun 2024. Your bank or SPARSH deducted income tax (known as Tax deducted at Source or TDS) every month for that financial year. The income tax for fin yr 2023-24 is on your monthly pension of Rs 12 lakhs+DR+OROP arrears of say Rs 4.50 lakhs i.e. Rs 17 lakhs. Thus, you pay very high income tax in fin yr 2023-24. But the OROP arrears actually belong to four previous financial years i.e. Fin yr 2019-20, 2020-21, 2021-22 and 2022-23. When you add OROP arrears which belong to fin yr 2019-20 the income goes up in those four financial years. But these IT is  worked out in Form 10 (E) by your CA. Say your income in fin yr 2019-20 was pension of Rs 12 lakhs + DR + OROP Arrears. You got arrears of Rs 4.50 lakhs for 45 months. That is Rs 10,000 per month. In fin yr 2019-20, the arrears are from Jul 2019 to Mar 2020 i.e. 9 months. The OROP arrears are Rs 9 x 10000 = Rs 90,000. Your CA will work out your income tax in fin yr on pension of Rs 12 lakhs + DR +OROP arrears of Rs 90,000. Say it comes to Rs 30,000. Similarly, let us say your additional IT for other three financial years comes as under:-

(a) Fin yr 2020-21 = Rs 35,000.

(b) Fin yr 2021-22 = Rs 40,000.

(c) Fin yr 2022-23 = Rs 45,000

(d) Total additional IT to pay for four financial years = 30000 + 35,000+40,000+45000 = 1,50,000.

5. Now your CA will show these details in Form 10 (E) as under:-

(a) Additional IT now to pay for four financial years = Rs 1,50,000 (see para 4).

(b) IT for fin yr 2023-24 only on pension of Rs 12,000 pm +DR= Rs 2,75,000

©  Total IT now to pay in fin yr 2023-24= Rs 4,25,000.

(d) IT paid already in fin yr 2023-24 = Rs 4,50,000

(e) Excess IT deducted by Bank or SPARSH i.e. IT Refund = Rs 450000-425000 = Rs 25,000.  

*Conclusion*

6. A sample calculation is attached. May be a bit difficult to understand in the first go. Read this message first and understand how IT relief is to be worked out. Since your bank deducted IT when you received arrears in Jun 2023, that will be the highest. But when you add OROP arrears to previous fin yrs and work out IT with arrears per year, you will find it will be lesser than what your bank deducted when they remitted your bulk OROP arrears. The difference is the IT relief as explained in para 5.

with warm regards & respects, 

Brig CS Vidyasagar(Retd), 

WhatsApp: 75695 13350, 

email: brigvidya.tsewa@gmail.com