Work out the total arrears owed to you when a pay revision, DA hike, or delayed increment takes effect from an earlier date than it was actually paid.
Whenever a pay revision, promotion, increment, or DA hike is approved with a retrospective effective date, which is common with pay commission implementations and annual increments, the gap between what you were actually paid and what you should have received for those months is settled as a lump sum arrear payment, usually alongside your next regular payslip.
Enter your old and revised basic pay along with the old and revised DA rate, then set the number of months the gap covers. The tool works out your gross pay under both the old and revised figures, subtracts one from the other to get the monthly arrear, and multiplies that by the number of months to give you the total amount due.
If your basic pay moved from ₹40,000 to ₹44,900 and DA moved from 58% to 60% for a 2 month gap, your old gross was ₹63,200 a month and your revised gross is ₹71,840 a month. That works out to an arrear of ₹8,640 for each of the 2 months, or ₹17,280 in total.
The difference between what you were paid and what you should have been paid for a period where a revision was due but not yet reflected, usually settled as a lump sum.
No, they're taxed as regular income in the year received, though Section 89(1) relief can reduce the impact of being pushed into a higher slab.
The same way as basic pay arrears, as the difference between old rate DA on old basic and revised rate DA on revised basic, for each affected month.