How to Claim Tax Relief on Salary Arrears With Form 10E?

What is Section 89(1)?

Your tax filings are calculated based on your sum income for a particular financial year. Now, in case your current income includes any dues from the past that are supposed to be paid this year, it is natural to worry about increased tax on such arrears and a general increase in the tax rate. Here comes tax relief u/S 89(1) to save you from this hassle and financial burden. ^¹According to this, you simply need not pay any additional taxes in case there was a payment delay or you fell into a lower tax bracket in the financial year when you got the money.^¹

However, it is important to ensure that individuals match the eligibility criteria to enjoy the relief benefits under this section. Here is a list to help you understand where you may claim the relief u/S section 89(1): ¹

• On premature withdrawal from EPF

• In case you got your salary in advance or in arrears

• On family pension arrears

• On gratuity

• On compensation for employment termination

• On lump sum amount of pension

Calculating Tax Relief with Section 89(1)

Now that you know you may claim tax relief u/S 89(1), let's move forward. Let's try and understand how to estimate this tax relief by yourself. Here is a step-by-step guide on how you may do it. ²

1. Calculate payable tax due on the entire income. This shall include your total income plus the arrears. The arrears here will be showcased in the Part B of the form.
2. Now, calculate the payable tax due on your income minus the arrears. You may ask your employer to help you with your salary arrears document.
3. Next, find the difference between the figures mentioned above in Step 1 and Step 2. Say that difference to be ‘a’.
4. Now, consider calculating your payable tax due in the year where your salary arrears were due, including the arrears.
5. Now, consider calculating your payable tax due in the year where your salary arrears was due, excluding the arrears.
6. Now, consider finding the difference between the figures mentioned above in steps 4 and step 5. Say that difference to be ‘b’.
7. Finally, consider subtracting ‘b’ from ‘a’ to get an estimate for your relief amount.

How to Claim Tax Relief on Salary Arrears with Form 10E

To claim tax relief u/S 89(1), it is mandatory to file the Form 10E. Form 10E can be easily filed online on the e-portal of the income tax. ^¹ Form 10E consists of all the necessary details related to your total income, specified income, and the arrears received. ²

Filing 10E- A Comprehensive Guide

Now that you know the importance of Form 10E let's see how to file a form to claim your benefits. Here is your step-by-step guide. ^¹

1. Consider logging in to the e-portal of the income tax department. You may use your user ID and password for the same.
2. Once you've successfully logged in, consider choosing ‘e-file', then choose ‘income tax forms’ and select ‘file income tax forms.’
3. Now, you may see a new screen. Scroll carefully and pick the option ‘persons without professional and business income’ and then proceed with form 10E.
4. Now, choose your assessment year and proceed with ‘continue'.
5. Now, you may start filing the form by selecting ‘ Let's get started.’
6. Next, choose the applicable items relating to your income particulars and choose ‘continue'.
7. Now, add your necessary details and move forward.
8. Once you're done filling in all the details, choose ‘preview’ and then complete your form by choosing ‘e-verify’ and ‘submit’.
9. Once your form is successfully submitted, you may receive a notification with transaction ID and acknowledgement details. Make sure to safely store it for future records.

Conclusion

Form 10E is an important tool that comes in handy while claiming tax relief on arrears. You may easily file this form online. Further, in case you've claimed relief under 89(1) but you forgot or missed to file 10E, you may receive an income tax notice. ^¹ Also, don't forget it is important to file 10E before you file your tax returns to enjoy relief on arrears. ^¹

FAQs

1. What is Form 10E?

   Form 10E is an important document that an individual needs to file in case you want to enjoy the claim relief u/S 89(1). ^¹

2. What should be your assessment year when filing 10E?

   When filing your form 10E, make sure to carefully choose your assessment year. This should be the year in which you received your arrears. For example, if you received your arrears in the financial year 2022-23, then choose the assessment year 2023-24. ^¹

3. Where to file form 10E?

   You may easily file form 10E online by visiting the online e-portal of the Income Tax department. ^¹