Section 89A of the Income Tax Act, 1961 was introduced by the Finance Act, 2020, and is effective from April 1, 2020. This section provides relief to taxpayers who have opted for the new tax regime introduced in the same Finance Act, but have pending claims or returns from the previous tax regime.
Under the new tax regime, taxpayers have the option to opt for lower tax rates but are required to forego certain deductions and exemptions available under the previous tax regime. This led to a situation where some taxpayers, who had pending claims or returns under the previous tax regime, were unable to avail of the benefits of those claims or returns.
Section 89A was introduced to address this issue and provides relief to taxpayers who have pending claims or returns from the previous tax regime. The section allows such taxpayers to claim the benefits of their pending claims or returns in the year in which they opt for the new tax regime.
The relief under Section 89A is available to taxpayers who have opted for the new tax regime and have a pending claim or return under any of the following provisions of the Income Tax Act:
Section 10(5) – Leave travel concession
Section 10(13A) – House rent allowance
Section 10(14) – Special allowances or benefits
Section 10(17) – Pension received by a family member of a deceased employee
Section 24(b) – Interest on housing loan
Section 32 – Depreciation
Section 32AD – Investment in new plant or machinery in notified backward areas
Section 33AB – Tea development account, coffee development account, and rubber development account
Section 33ABA – Site restoration fund
Section 35 – Expenditure on scientific research
Section 35AD – Investment in specified businesses
Section 35CCC – Expenditure on agricultural extension projects
Section 57 – Deduction from income from other sources
Section 80-IA – Deduction in respect of profits and gains from industrial undertakings or enterprises engaged in infrastructure development
Section 80IAB – Deduction for profits and gains from housing projects in affordable housing segment
Section 80IB – Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings
Section 80IC – Deduction in respect of profits and gains from certain industrial undertakings or enterprises operating in certain areas notified on or after April 1, 2007
Section 80ID – Deduction in respect of profits and gains from business of hotels and convention centers in certain areas
To avail of the relief under Section 89A, taxpayers are required to furnish a declaration in Form 10-IE to their employer or the income tax department, as the case may be, specifying the details of their pending claim or return. The relief will be allowed in the year in which the taxpayer opts for the new tax regime.
Additional information about Section 89A of the Income Tax Act:
Who can claim relief under Section 89A?
The relief under Section 89A is available to taxpayers who have opted for the new tax regime introduced by the Finance Act, 2020, and have a pending claim or return under any of the provisions mentioned in the section. The relief is not available to taxpayers who have not opted for the new tax regime.
What is the benefit of claiming relief under Section 89A?
The benefit of claiming relief under Section 89A is that the taxpayer can reduce their tax liability by claiming the benefits of their pending claims or returns under the previous tax regime in the year in which they opt for the new tax regime. This can result in a significant reduction in tax liability for some taxpayers.
What is the time limit for claiming relief under Section 89A?
There is no specific time limit for claiming relief under Section 89A. However, it is advisable for taxpayers to claim the relief as soon as they opt for the new tax regime to avoid any delay in processing their claim.
How to claim relief under Section 89A?
To claim relief under Section 89A, taxpayers are required to furnish a declaration in Form 10-IE to their employer or the income tax department, as the case may be, specifying the details of their pending claim or return. The relief will be allowed in the year in which the taxpayer opts for the new tax regime.
Is relief under Section 89A available for all pending claims or returns?
No, relief under Section 89A is available only for pending claims or returns under the provisions mentioned in the section. If a taxpayer has a pending claim or return under any other provision of the Income Tax Act, they cannot claim relief under Section 89A.
Conclusion
Section 89A of the Income Tax Act provides relief to taxpayers who have pending claims or returns under the previous tax regime and have opted for the new tax regime. By claiming the benefits of their pending claims or returns, taxpayers can reduce their tax liability and avoid any undue financial burden. It is advisable for eligible taxpayers to claim relief under Section 89A in a timely manner to avoid any delay in processing their claim.
Other Useful Links:Â
- Section 194IB of Income Tax Act
- Section 194J of Income Tax Act
- Section 194K of Income Tax Act
- Section 194N of Income Tax Act
- Section 194O of Income Tax Act
- Section 195 of Income Tax Act
Frequently Ask QuestionÂ
Q:1 Who can claim relief under Section 89A?
A: The relief under Section 89A is available to taxpayers who have opted for the new tax regime introduced by the Finance Act, 2020, and have a pending claim or return under any of the provisions mentioned in the section.
Q:2 Can taxpayers claim relief under Section 89A for pending claims or returns under any other provision of the Income Tax Act?
A: No, relief under Section 89A is available only for pending claims or returns under the provisions mentioned in the section.
Q:3 What is the benefit of claiming relief under Section 89A?
A: The benefit of claiming relief under Section 89A is that the taxpayer can reduce their tax liability by claiming the benefits of their pending claims or returns under the previous tax regime in the year in which they opt for the new tax regime.
Q:4 Is there a time limit for claiming relief under Section 89A?
A: There is no specific time limit for claiming relief under Section 89A. However, it is advisable for taxpayers to claim the relief as soon as they opt for the new tax regime to avoid any delay in processing their claim.
Frequently Ask Question
Q:5 How can taxpayers claim relief under Section 89A?
A: To claim relief under Section 89A, taxpayers are required to furnish a declaration in Form 10-IE to their employer or the income tax department, as the case may be, specifying the details of their pending claim or return.
Q:6 What is Form 10-IE?
A: Form 10-IE is a form prescribed by the Income Tax Department for claiming relief under Section 89A.
Q:7 Can taxpayers claim relief under Section 89A if they have not opted for the new tax regime?
A: No, relief under Section 89A is available only to taxpayers who have opted for the new tax regime.
Q:8 Is relief under Section 89A available for all taxpayers?
A: No, relief under Section 89A is available only to taxpayers who have pending claims or returns under the provisions mentioned in the section and have opted for the new tax regime.
Q:9 How can taxpayers know if they are eligible for relief under Section 89A?
A: Taxpayers can check if they have pending claims or returns under the provisions mentioned in the section and if they have opted for the new tax regime to determine if they are eligible for relief under Section 89A.
