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What is Relief under section 89(1) and filing form 10E?
Relief under Section 89(1) applies to the Assessee having Income from Salary. Which is claimed by filing Form 10E. This applies only under the head ‘Income from Salary’.
Salaried employees receive their salary on a regular basis, which is taxed based on the accrued or received amount. Sometimes, employees may also receive salary arrears for past periods. This usually happens when a pay commission revises salaries or due to other reasons.
When the salary is received in arrears, it is received in a lump sum and taxed in the year it is received. This increases the tax burden in the year of receipt. Therefore, this is systematically distributed among the years for which it received and calculates the difference between the tax that would have been paid if it had received in previous years and the tax in the current year because of the receipt of arrears. The excess difference that is payable in the current year, that is, in the year of receipt, is allowed as a deduction as relief under section 89(1) of the Income Tax Act.
The tabular presentation of calculations are as below. Filing form 10E.
| ANNEXURE I | ||
| (See item 2 of Form No. 10E) | ||
| ARREARS OR ADVANCE SALARY | ||
| 1 | Total taxable income (excluding salary/family pension received in arrears) | xxxxx |
| 2 | Salary/family pension received in arrears | xxxx |
| 3 | Total income (as increased by salary/family pension received in arrears) | xxxxxx |
| 4 | Tax on total income (as per item 3) | xxx |
| 5 | Tax on total income (as per item 1) | xx |
| 6 | Tax on salary/family pension received in arrears [Difference of item 4 and item 5] | xx |
| 7 | Tax computed in accordance with Table “A” [Brought from column 7 of Table “A”] | x |
| 8 | Relief under section 89(1) | x |
This Excel Calculator simplifies the process by automatically calculating Relief based on the factors listed below.
- Distribution of arrears for the years for which it received.
- Calculation of Tax related to those years.
- Relief calculation.
Eligible Components received in Arrears.
- Arrears of Salary
- Family pension received in arrears
- Advance Salary
- Gratuity received
- Commutation of Pension received
- Compensation received on the termination of an Employment.
What is the filing Form 10E?
The calculations are made to arrive at the relief under section 89(1). But an Assessee can claim after filing form 10E. Filing of Form 10E is only through the online mode as per the steps given below.
Steps in filing Form 10E
- Log in to the Income Tax e-filing portal, click here.
- Go to tab, e-file > Income Tax Forms
- Select the 2nd option, “Persons without Business/Professional Income”
- Then click on “Tax Exemptions and Reliefs (Form 10E)” for filing.
- Select Assessment Year (e.g., Assessment Year is 2025-26 for the Financial Year 2024-25) and click on the Continue button > and Let’s get started.
- Select the 1st component “Arrears Salary/Family Pension”. Because you are filing for Salary or Pension of Family Pension received in Arrears.
- Finally, submit the same and get an acknowledgement.
Note :
- This should be filed before filing the Income Tax return.
- Non-filing of Form 10E and claiming Relief under section 89(1) leads to the issue of a notice by the Income Tax department asking to file Form 10E online as per section 89.
- Assessee must have filed Income Tax returns for which the Arrears are received. Otherwise, it is difficult to produce evidence of the Salary received during those years.
Click below to download Free Excel calculator for Relief under section 89(1). For filing Form 10E :
Please click here for the Income Tax Calculator FY 2024-25.
