Section 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 whichit 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 undersection 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 advance or, any portion offamily pension received in arrears (herein referred to as the "additionalsalary" or "additional family pension", as the case may be).
Relief = A – B, if A exceeds B, where—
A = C – D;
B = Aggregate of E;
E = F – G
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 ormore tax years, the tax years to which the additional salary or additionalfamily pension relates and the amount relating to each such tax year shallfirst 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 oradditional family pension, as if the total income so reduced were thetotal income of the relevant tax year; and
A = tax on the additional salary or additional family pension for therelevant tax year.
Step 3:Calculate E = F – G,Where,—
G = tax payable in respect of the total income of each tax yearascertained in Step 1;
F = tax payable on the total income of such tax year as increased bythe amount relating to such tax year as ascertained in Step 1, as if thetotal income so increased were the total income of that tax year; and
E = tax on the additional salary or additional family pension for eachtax year ascertained in Step 1.
Step 4:B = aggregate of tax on the additional salary or additional familypension. Calculate "B" to be the total of tax on the additional salary oradditional family pension, which was ascertained as E in Step 3 for alltax years ascertained in Step 1.
2. Gratuity received in respect of past services extending over a period ofgreater than or equal to five years but less than fifteen yearsRelief = G × (R1-RAvg), if R1 exceeds R AvgWhere,–
G = gratuity received in the relevant tax year;
R1 = average rate of tax on the total income including gratuityamount received in Y1;
RAvg = ( R2+R3)/2;
R2 = average rate of tax on the total income for Y2 as increased byone-half of the gratuity received, as if the income so increased werethe total income of that tax year;
R3 = average rate of tax on the total income for Y3 as increased byone-half of the gratuity received, as if the income so increased werethe 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 extending over a period of notless than fifteen years Relief = G × (R1-RAvg), if R1 exceeds R Avg.Where,–
G = gratuity received in the relevant tax year;
R1 = average rate of tax on the total income including gratuityamount received in Y1;
RAvg = ( R2+R3+R4)/3;
R2 = average rate of tax on the total income for Y2 as increased byone-third of the gratuity received, as if the income so increased werethe total income of that tax year;
R3= average rate of tax on the total income for Y3 as increased byone-third of the gratuity received, as if the income so increased werethe total income of that tax year;
R4 = average rate of tax on the total income for Y4 as increased byone-third of the gratuity received, as if the income so increased werethe 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 the former employer at or inconnection with the termination of employment after continuous service fornot less than three years and where the unexpired portion of term ofemployment is also not less than three years
Relief = C × (R1–RAvg), if R1 exceeds R Avg.Where,–
C = compensation amount received in the relevant tax year;
R1 = average rate of tax on the total income including compensationamount received in Y1;
RAvg =( R2+R3+R4)/3;
R2= average rate of tax on the total income for Y2 as increased byone-third of the compensation amount received, as if the income soincreased were the total income of that tax year;
R3= average rate of tax on the total income for Y3 as increased byone-third of the compensation amount received, as if the income soincreased were the total income of that tax year;
R4= average rate of tax on the total income for Y4 as increased byone-third of the compensation amount received, as if the income soincreased 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 × (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 ofcommutation of pension received in Y1;
RAvg =( R2+R3+R4)/3;
R2= average rate of tax on the total income for Y2 as increased byone-third of the amount of commutation of pension received, as if theincome so increased were the total income of that tax year;
R3= average rate of tax on the total income for Y3 as increased byone-third of the amount of commutation of pension received, as if theincome so increased were the total income of that tax year;
R4= Average rate of tax on the total income for Y4 as increased byone-third of the amount of commutation of pension received, as if theincome 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 section263(1)(c).
(4) Where the assessee, being a Government servant or an employee in a company, co-operative society, local authority, university, institution, association orbody, 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 paymentreferred to in section 392(1).