Skip to main content

Got salary arrears? Have you claimed relief u/s 89 of Income Tax Act, 1961?

Have you received salary arrears due to delayed pay revision? And paying tax at higher tax slab because of the bulk amount being received in one go? Or would have paid tax at lower tax slab (5% or 20%), had the amount been received in the respective years? If yes, then you need to file Form 10E to claim a relief u/s 89 of Income Tax Act, 1961 at the time of filing Income Tax Return (ITR).

The relief u/s 89 can be calculated as –

A = Tax paid on Total Income (from all sources, including arrears) for the year in which arrears are received (-) Tax on Total Income (from all sources, excluding arrears) for the year in which arrears are received

B = Tax on Total Income (from all sources, including arrears) for the year to which arrears pertain to (-) Tax paid on Total Income (from all sources, excluding arrears) for the year to which arrears pertain to

Relief u/s 89 = A (-) B

To claim this relief, you need to submit Form 10E along with your Income Tax Return (ITR) for the year during which the arrears are received.

What details to be collected before starting to file Form 10E?

To begin with, download the intimation orders for all the Assessment Years to which the arrears pertain to.

How to file Form 10E?

  • Login to income tax e-filing portal (https://eportal.incometax.gov.in/iec/foservices/#/login)
  • Go to ‘e-File’, click ‘Income Tax Forms’, then click ‘File Income Tax Forms’
  • Go to tab ‘Persons without Business/Professional Income’
  • Click on ‘Tax Exemptions and Relief (Form 10E)’
  • Assessment Year – select current assessment year
  • Click on ‘Continue’
  • Click on ‘Let’s get started’
  • Select applicable items regarding particulars of income – tick the option ‘Arrears Salary / Family Pension [Annexure I]’
  • Click on ‘Continue’
  • The form has 3 tabs – (1) Personal Information (2) Arrears Salary / Family Pension (3) Verification

Personal Information 

  • Check the personal information and click on ‘Save’

Arrears Salary / Family Pension

  • Fill in the details as follows –

1 Total taxable income (excluding salary / family pension received in arrears) Total Income (from all sources) for current Assessment Year (-) Arrears received in the year
2 Salary / Family Pension received in arrears Automatically calculated
3 Total income (as increased by salary / family pension received in arrears) [Add item 1 and item 2] Automatically calculated
4 Tax on total income as per system calculation (as per item 3) Automatically calculated
Tax on total income as per taxpayer (as per item 3) Tax on total income (from all sources, including arrears) to be calculated as per applicable tax slabs for current Assessment Year.
5 Tax on total income as per system calculation (as per item 1) Automatically calculated
Tax on total income as per taxpayer (as per item 1) Tax on total income (from all sources, excluding arrears) to be calculated as per applicable tax slabs for current Assessment Year.
6 Tax on salary/family pension received in arrears [Difference of item 4 and item 5] Automatically calculated

  • Table A – Details of salary / Family Pension received in arrears relating to different previous years
  • Click on ‘Add Details’
Previous year(s) Year to which the arrears pertain to
Total income of the relevant previous year ‘Aggregate Income’ as given in the ‘Intimation Order’ of the relevant previous year
Salary / Family Pension received in arrears relating to the relevant previous year as mentioned in column (1) Arrears pertaining to the relevant previous year
Total income (as increased by salary received in arrears) of the relevant previous year mentioned in column (1) [Add columns (2) and (3)] Automatically calculated
Tax on total income [as per column (2)] ‘Net tax liability’ as given in the ‘Intimation Order’ of the relevant previous year
Tax on total income as per system calculation [as per column (4)] Automatically calculated
Tax on total income as per taxpayer [as per column (4)] Total Income (from all sources, including arrears) = ‘Aggregate Income’ as given in the ‘Intimation Order’ of the relevant previous year (+) Arrears pertaining to that year

Tax to be calculated as per tax slabs applicable for that year
Difference in tax [Amount under column (6) minus amount under column (5)] Automatically calculated

  • Click on ‘Add’ 
  • After adding, the details will appear as follows

 

1 2 3 4
Sl. No. Previous year(s) Total income of the relevant previous year Salary / family pension received in arrears relating to the relevant previous year as mentioned in column (1) Total Income (as increased by salary / family pension received in arrears) of the relevant previous year mentioned in column (1) [Add column (2) and (3)]
1 xxxx-xx xx xx xx

  • Again, click on ‘Add Details’ if arrears are received for multiple previous years. 
  • Save entries for all the relevant previous years for which the arrears are received.

7 Tax computed in accordance with Table 'A' [Brought from column 7 of Table 'A'] Automatically calculated
8 Relief under section 89[Indicate the difference between the amounts mentioned against items 6 and 7] Automatically calculated

Note this figure for filling ITR

  • Click on ‘Save’

Verification 

  • Tick the checkbox and click on ‘Save’

Click on ‘Preview’ and check the filled details.

Click on ‘Proceed to E-verify’ and e-verify the form using any of the given options.

Where to enter the Relief details in Income Tax Return (ITR)?

  • The Income Tax Return (ITR) has 5 tabs –
    1. Personal Information
    2. Gross Total Income
    3. Total Deductions
    4. Taxes Paid
    5. Total Tax Liability
  • Fill the ITR to reach the tab ‘Total Tax Liability’
  • Enter the amount of relief as noted from Form 10E under the head ‘Relief u/s 89 (Relief when salary, gratuity, etc. is paid in arrears or in advance)’
Related Articles

Follow at - Telegram   Instagram   LinkedIn   Twitter

Comments

Popular Posts

FX Global Code

Reserve Bank of India (RBI) has signed its renewed Statement of Commitment (SoC) to the FX Global Code.  What is FX Global Code? FX Global Code is a set of global principles of good practice in the foreign exchange market. The Code contains 55 principles that provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. The principles cover ethics, governance, execution, information sharing, risk management and compliance as well as confirmation and settlement. The establishment of the Code was facilitated by the Foreign Exchange Working Group (FXWG), which operated under the auspices of the BIS Markets Committee.  The Code was developed by a partnership between central banks and market participants from around the globe and was first published in 2017. The Code promotes a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of market participants, supported by resilient infras...

Lending against Gold and Silver collateral

Reserve Bank of India (RBI) has issued directions on lending against the collateral of gold and silver. To whom are the directions applicable? The directions are applicable to the following regulated entities (REs) – Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks, but excluding Payments Banks). Primary (Urban) Co-operative Banks (UCBs) & Rural Co-operative Banks (RCBs), i.e., State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs). Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs). Which loans are covered under the directions? The directions shall apply to all loans offered by an RE for the purpose of consumption or income generation (including farm credit) where eligible gold or silver collateral is accepted as a collateral security. What is eligible collateral? Eligible collateral means the collateral of jewellery, ornaments or coins made of gold or silver. A lender shall not grant any ad...

Report of the Committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector

Reserve Bank of India (RBI) has released the report of the committee to develop a framework for responsible and ethical enablement of artificial intelligence (FREE-AI) in the financial sector. Committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector In the financial sector, Artificial Intelligence (AI) has the potential to unlock new forms of customer engagement, enable alternate approaches to credit assessment, risk monitoring, fraud detection, and offer new supervisory tools. At the same time, increased adoption of AI could lead to new risks like bias and lack of explainability, as well as amplifying existing challenges to data protection, cybersecurity, among others. To encourage the responsible and ethical adoption of AI in the financial sector, the committee to develop a Framework for Responsible and Ethical Enablement of Artificial Intelligence (FREE-AI) in the Financial Sector (Chairperson: Dr. Pushpak B...

Amendments in / additions to forex guidelines

Reserve Bank of India (RBI) has amended various forex guidelines. This article lists out some of the such recent amendments. What are the updates in the existing guidelines? Previous guidelines Revised guidelines Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills. The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account. Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills and non-convertible debentures / bonds and commercial papers issued by an Indian company. The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account. The balance...

Investments in Non-SLR instruments by State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs)

Reserve Bank of India (RBI) has issued directions on investments in non-SLR instruments by State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs). What is the prudential limit for non-SLR investment by StCBs and CCBs? Total Non-SLR investments shall not exceed 10% of the total deposits of a bank as on March 31 of the preceding financial year. Which instruments are permitted for non-SLR investments by StCBs and CCBs? StCBs / CCBs may invest in the following instruments – "A" or equivalent and higher rated Commercial Papers (CPs), debentures and bonds. Units of Debt Mutual Funds and Money Market Mutual Funds. Shares of Market Infrastructure Companies (MICs), e.g. Clearing Corporation of India Ltd. (CCIL), National Payments Corporation of India (NPCI), Society for World-wide Inter-bank Financial Telecommunication (SWIFT). Share capital of Shared Service Entity (SSE) set up by National Bank for Agriculture and Rural Development (NABARD) for StCBs and CCBs. Which a...