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Salary Arrears
Work out the back-pay owed to an employee from a retroactive salary revision — in seconds.
Total Arrears
How to use the salary arrears calculator
Enter the old monthly salary
This is the salary the employee was actually paid before the revision took effect.
Enter the revised monthly salary
The new, higher salary that should have applied from the earlier effective date — from an increment, promotion, or pay-commission revision.
Enter the number of retroactive months
Count the months between the revision's effective date and the date it was actually implemented in payroll.
Read your result
See the total arrears owed, along with the monthly difference and the number of months it's calculated over.
What are salary arrears?
Salary arrears are the back-pay owed to an employee when a salary revision — a delayed increment, a late promotion, or a pay-commission revision — is applied retroactively, from a date earlier than when it was actually processed in payroll.
- A revision effective from an earlier date, but paid out later, creates a gap between what the employee was paid and what they should have been paid for those months — that gap is the arrears.
- Common causes: increments or promotions finalized after the appraisal cycle, pay-commission revisions implemented months after their effective date, and corrections to pay errors found after the fact.
- Arrears are paid as a separate lump sum alongside, or shortly after, the revised salary takes effect going forward.
The salary arrears formula
The calculation is simple once you know the old salary, the revised salary, and how many months the revision applies retroactively.
Total Arrears = (Revised monthly salary − Old monthly salary) × Number of retroactive months
For example, a salary revised from ₹50,000 to ₹58,000 a month, backdated 6 months, works out to (₹58,000 − ₹50,000) × 6 = ₹48,000 in total arrears.
How are salary arrears taxed?
This calculator shows gross arrears only — it doesn't calculate tax. Arrears have a tax quirk worth knowing about before you process them.
- Arrears are taxed in the year they're RECEIVED, not the year they were actually earned — so a lump sum paid this year is added to this year's income, even though it covers past months.
- That can push the employee into a higher tax slab for the year of receipt, purely because of the timing of payment, not because their actual earning capacity changed.
- Section 89(1) of the Income Tax Act gives relief for exactly this situation — it compares the tax payable with the arrears spread across the years they were earned against the tax payable with them bunched into the year received, and refunds the difference.
- To claim Section 89(1) relief, the employee files Form 39 under the Income Tax Rules 2026 — this replaced the older Form 10E.
This calculator shows gross arrears only — for the actual Section 89(1) relief amount, consult a tax advisor or your payroll team.
Salary arrears calculator — frequently asked questions
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