Is filing Form 10E mandatory to claim Section 89 relief?

Yes. As per Section 89(1) and Rule 21AA, it is mandatory to submit Form 10E electronically on the Income Tax e-filing portal before filing your Income Tax Return. If Form 10E is not submitted, the tax department will disallow the relief and issue a tax demand.

How does Section 89 relief save tax on salary arrears?

When arrears for past years are received in a lump sum, they push the employee into a higher tax bracket in the current year. Section 89 calculates the tax that would have been payable if the arrears were received in the respective past years and deducts the excess tax paid.

Section 89(1) Arrears Relief Calculator | Form 10E Tax Computation

Form 10E Arrears Relief Form

Enter salary and arrears details across current and preceding financial years

Current Financial Year of Receipt (e.g. FY 2024-25)

Current Year Regular Income (Excluding Arrears) (₹)

Total Salary / DA Arrears Received (₹)

Tax Regime in Current Year

Preceding Year to which Arrears Relate (e.g. FY 2023-24)

Past Year Taxable Income (As Originally Filed) (₹)

Tax Regime in Past Year

Section 89(1) / Form 10E Statutory Relief Outcome

Form 10E Compliant

Total Tax Relief under Section 89(1) ₹0

This exact amount will be deducted from your current year's tax payable when submitting Form 10E.

Tax Payable Without Sec 89 Relief ₹0 Step 1: On Total Income with Arrears

Net Tax Payable After Relief ₹0 Final amount to pay with ITR

Form 10E Step-by-Step Computation Table

Step 1: Current Year Tax (Including Arrears) Total Income: ₹0

₹0

Step 2: Current Year Tax (Excluding Arrears) Regular Income: ₹0

₹0

Step 3: Tax on Arrears in Current Year Step 1 minus Step 2

₹0

Step 4: Past Year Tax (Including Arrears) Total Income in past year: ₹0

₹0

Step 5: Past Year Tax (Excluding Arrears) Originally filed income: ₹0

₹0

Step 6: Tax on Arrears in Past Year Step 4 minus Step 5

₹0

Step 7: Relief under Section 89(1) Step 3 minus Step 6 (if positive)

₹0

How to File Form 10E

Log in to the Income Tax e-Filing portal (incometax.gov.in).
Go to e-File > Income Tax Forms > File Income Tax Forms.
Select Form 10E (Form for relief under section 89).
Select the relevant Assessment Year and enter the numbers from the 7-step table on the left.
E-verify and submit Form 10E before submitting your ITR-1 or ITR-2.

Related Calculators

Understanding Section 89(1) Tax Relief on Arrears

When government or PSU employees receive arrears of salary or Dearness Allowance relating to past financial years in a lump sum, their total income in the year of receipt experiences an artificial spike. This often pushes the taxpayer into a higher tax slab (e.g. from 10% to 20%, or from 20% to 30%).

Why Section 89(1) Exists

To prevent undue tax penalization caused solely by administrative delays in salary revisions, the Income Tax Act provides relief under Section 89(1). The relief ensures that the taxpayer pays no more tax than they would have paid had the income been disbursed on time during the relevant past financial years.

Mandatory Form 10E Filing

Filing Form 10E online is mandatory. Under Section 89(1) read with Rule 21AA, claiming relief in Schedule TR of the ITR without first uploading Form 10E on the income tax portal results in automatic rejection of the relief claim by CPC Bengaluru, accompanied by a tax demand notice under Section 143(1).

Frequently Asked Questions (Section 89 Relief)

Can Section 89 relief result in a negative value?

No. If the tax on arrears in the current year is less than or equal to the tax on arrears in the past year (Step 3 ≤ Step 6), the relief is zero. Section 89 relief can never increase your tax liability.

Can I claim Section 89 relief on VRS compensation?

No, if you have already claimed the statutory tax exemption of up to ₹5,00,000 under Section 10(10C) for voluntary retirement compensation, you cannot simultaneously claim relief under Section 89.