Arrears Meaning and How to Calculate Arrears on Salary

Arrears Meaning

An amount offered by employer or organization given to employee at end of the year/ period termed as Arrears. In regular terms, the commitment for payment of Dearness allowance or any saving amount by employee kept on hold or delayed by organization. This amount accumulated and paid after a certain period in meaning referred as Arrears.

In general the Arrears meaning is the sum of payments, due collected in your account since the payment of first payment. The item used in terms of rent payments, water bills, child support, dividends, repayment loan and such similar kind of payments.

An account referred to in Arrears, if the service already rendered and the payment is due and paid after the retirement or maturity age.

The amount accumulated in the LIC savings account, life premium account, pension account, employee provident fund account referred as Arrears. In general the amount as salary paid to an employee at the end of every year after the service offered.

Payment in Arrears

Once a service offered and executed, the payment in overdue paid. The paid amounts are a lot different from the due payment or any advance paid as agreed. The payment also distinguished as payment which is not classified as any late payment. Some payments in Arrears are postpaid phone service, water bill, electricity bill, property tax, income tax and more.

Key Points

Here are some important and basic points of overdue, which might help you know these terms more precisely.

  • Arrears is a legal and financial term describes the liability or obligation which not yet received by its due date.
  • Overdue doesn’t mean any negative connotation, as it doesn’t include due amount but the amount subscribed paid by the date.
  • Annuities in overdue used when there are payments due end of project.

Call in Arrears

The term Call-In Arrears used when an amount paid by the shareholder on call of money by the due date. Actually, this may calculated by deducting the paid up capital from the total called up capital. The Call-In Arrears will be zero, if the difference between Call-up capital and Paid-up capital is zero.

Annuities

Overdue mostly used in the financial industry when making the annuity payments. An annuity is a transaction which occurs in equal intervals and paid over a defined time. If an amount paid at the end of period rather than start period, then it refer as Annuity in Arrears.

Dividend

The word overdue is also applicable when a publicly traded company does issue the dividends to investors. This concept occurs when the company does delay the payment and the cumulative dividend to stakeholders delayed by due date. The stakeholders must pay their dividends, thus this share of amount referred to as dividend.

Arrears Swap

The Overdue is a type of interest rate swap, which set to pay the interest rate at the end of the period. But it is not at the start of coupon period. On the other hand, the standard swap does set the interest rate at the beginning but not at period end. Arrears swap mostly used by speculators who do predict the yield curve and get the interest payment period end.

How to Calculate Arrears

The payment of employees if paid as overdue, does make it easier for distribution and as well more accurate payment. Here are some points which may follow if you want to check the amount for an employee.

  • Get the basic monthly salary of an employee
  • Then calculate the amount from the previous month to the date
  • Now subtract the amount already paid to employee
  • The amount left is the amount has to pay

That’s it, This way you can get to know what the actual amount of overdue has to pay to employee. It is from the effective date of their increment. The steps are similar in all organizations, which may further adds with other tips, overtime benefit or appraisal amount if any.

DA Arrears

Department of Expenditure will announce the DA rates quarterly / half yearly for PSU and Central Government sector employees. If the announcement comes late, all the employees may paid DA arrears in the next month pay. For more details on this DA mattes, Please visit doe.gov.in

  1. What does one month in Arrears mean?

    One month in Arrears does actually mean that the individual paid at the end of month for time worked in respective previous month. This may fixed payment schedule dates, which can be for salary or for any type of work. It is performed in the company as described in your joining letter.

  2. What does pay Arrears mean?

    When an employer or an organization does pay their employee or worker at the end of the work. The work can be for hours or for a week or for a month, as described at start of project. The payment made to employee or worker referred to as Pay Arrears.

  3. What is Dearness Allowance Arrears?

    As the Government authorized to increase their DA rate for Government employee quarterly /half yearly, and due to any circumstance the hike may not happen. Whenever the amount of DA hike increased, the amount calculated from the last date of DA increment. Thus the amount due paid to employees by the Government for that particular period refer as Arrears.

  4. Outstanding amount and Arrears Amount same?

    The amount in Arrears is usual utility bill or payment to employee from whom the work subscribed. The outstanding amount is a payment amount which is due to pay by the particular date. This does not related to the subscribed amount for a utility or worker.

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