Why the arrears month feels so good and the next one does not
When an increment effective from April reaches you in August, that month carries two things at once: your higher salary, and the difference for April to July paid in one go. The bank credit looks unusually large. The months after it settle at the new regular figure, which is lower than the August credit but higher than what you were getting before.
Tax is the part that surprises people. Until the revision, your employer deducted tax based on your old salary continuing for the whole year. Once the revision lands, payroll recalculates the year's tax on the higher figure, including arrears, and spreads the shortfall across the remaining months. That is why tax deducted from September onwards is noticeably higher than it was in April.
You cannot claim relief on these arrears
Relief under Section 157(1) of the Income-tax Act, 2025, claimed on Form 39, applies when you receive arrears relating to an earlier year. An increment effective from April and paid in August falls entirely within the same year, so the money is taxed in the year it belongs to and there is nothing to relieve.
If part of your arrears relates to an earlier year, for example a revision backdated beyond the previous April, or a promotion settled after a long delay, that part may qualify. Our salary arrears relief calculator works out whether relief is due and by how much.
Three things worth checking
First, check that provident fund was deducted on the arrears as well. Arrears of basic pay attract the same 12% deduction, so the amount credited to you will be lower than the gross arrears figure.
Second, check whether your appraisal changed the structure of your package rather than just its size. If basic pay moved to a different percentage, or a larger share now sits in variable pay, your monthly increase may be smaller than the headline number suggests. This calculator assumes the same structure before and after.
Third, if you switched employers during the year, your new employer will not know about the salary and tax from the old job unless you declare it, which usually leaves a shortfall to settle at filing.
Common questions
Why is my August tax deduction not higher than other months?
Most employers spread the recalculated tax evenly across the remaining months rather than taking it all from the arrears payment. Some deduct a larger amount in the arrears month itself. Either way the total for the year is the same.
Does the increment count from April even though I was paid in August?
For tax, salary is taxed when it is due or received, whichever is earlier. An increment effective from April and paid in August is taxed in that same year, so the timing within the year makes no difference to the total.
Should I change my regime declaration after an increment?
You can. The declaration to your employer only sets how much tax is deducted from your salary. A salaried person can still choose the other regime when filing the return.
What if my arrears include a bonus or incentive?
Enter only the salary arrears here. Bonuses are usually taxed in the month they are paid, and our CTC to in-hand salary calculator handles variable pay separately.
This calculator gives an estimate for guidance and assumes salary is your only income. Last updated 23 September 2026.