Income Tax: Pay Commission

Because of Sixth Pay Commission report implementation, a lot of government and PSU employees on India are getting substantial backwages. This lumpsum payment has resulted in a substantial tax payout for even the lowest paid employees. Not only now these individuals fall under the higher tax slabs, but most of the officers need to pay a surcharge on their income tax (which typically was paid only by the highest paid private sector employees)

However, I was talking to my tax consultant and he said that if an individual has preserved all his tax papers, then there is a way out.
Pay Commission Arrears are payouts of the income withheld by the employer (Government). Hence they are technically income generated in the past years. Hence the individuals can submit a revised income tax documents and correct (increase) their salary in the previous years to reflect the new pay commission pay scales. Doing so they can avoid landing up in the highest tax slab for the financial year 2008-2009.

More details about the Sixth Pay Commission and official notifications/circulars on the same can be found here.

PS: Please consult your tax consultant for further details.