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CENTRE TO TAX ENTIRE SALARY ARREARS THIS YR

The government has decided to levy tax on the entire amount of arrears-60% of which will be paid next year-in the current fiscal itself. For most employees, the decision would virtually wipe out almost the entire amount of 40% arrears to be paid to them this year. Senior bureaucrats will suffer the most as their tax would be topped with a surcharge of 10%, applicable on an income of Rs 10 lakh and above. To bring down the burden on the budget, the government had announced that the arrears would be paid in two instalments, with 40% in the current year and the rest in the 2009-10 fiscal. But what the government failed to explain was that the entire arrears amount was taxable in the current fiscal.

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