The officials of the finance ministry are confused over the tax slab to be levied on the increased salary of center government employees.

Some officials have the view that the entire arrears are to be taxed, while other has a different view point on the matter. They said that the employees should be taxed on their received income.

According to the norms of income tax, arrears can be charged to income-tax under the head salaries if the salaries remain fixed for that period. The Supreme Court has also given the same ruling in case of CIT versus L W Russel 53ITR91.

The confusion arrived after the implementations of recommendations of sixth pay commission. The salary of central employees goes to 21% following these recommendations.

The revised pay scale would cause a burden of Rs 4,500-5,500 crore to the government exchequer this fiscal in personal income tax category. However, some money would come through indirect taxes following the purchase of products.