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

Reserve Bank of India Act, 1934 – Part-II – Section 17 to 19

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the second article in the series.  Section 17 – Business which the Bank may transact RBI shall be authorized to carry on and transact the several kinds of business hereinafter specified, namely – 17(1) – Accept deposit without interest from the Central / State Government, local authorities, banks and any other persons. 17(1A) – Accept deposit, repayable with interest, from banks or any other person under the Standing Deposit Facility Scheme, as approved by the Central Board, for the purposes of liquidity management.   Bills of Exchange (B/E) & Promissory Note (PN) Bearing 2 or more good signatures, one of which shall be of B/E & PN arising out of Maturing within 17(2)(a) Purchase, sale and rediscou...

Reserve Bank of India Act, 1934 – Part-I – Preamble and Section 1 to 13

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the first article in the series. Preamble of the Act RBI to – Regulate the issue of bank notes. Keep reserves for monetary stability in India. Operate currency and credit system of the country to its advantage. The primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth. Chapter I – Preliminary Section 1 – Short title, extent and commencement 1(1) – This Act may be called the Reserve Bank of India Act, 1934. 1(2) – The Act extends to whole of India. Chapter II - Incorporation, Capital, Management and Business Section 3 – Establishment and incorporation of Reserve Bank 3(1) – RBI to take over management of the currency from the Central Government. 3(2) – RBI to have perpetual succession, common seal, and shall by...

Reserve Bank of India Act, 1934 – Part-III – Section 20 to 40

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the third article in the series.  Chapter III - Central Banking Functions Section 20 – Obligation of the Bank to transact Government business RBI shall undertake – To accept monies for account of the Central Government and to make payments up to the amount standing to the credit of its account, and to carry out its exchange, remittance and other banking operations. Management of the public debt of the Union. Section 21 – Bank to have the right to transact Government business in India The Central Government shall entrust RBI with – All its money, remittance, exchange and banking transactions in India, and shall deposit free of interest all its cash balances with RBI. The Central Government may carry on money transactions at places where RBI has no branches or agencies and m...

Reserve Bank of India Act, 1934 – Part-IV – Section 42 to 45

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the fourth article in the series.  Section 42 – Cash reserves of scheduled banks to be kept with the Bank 42(1) – Every bank included in the Second Schedule shall maintain with RBI an average daily balance at a percent (notified by RBI) of its total demand and time liabilities in India. 42(1A) – RBI may direct every scheduled bank to maintain with RBI, in addition to the balance prescribed under Section 42(1), an additional average daily balance at a rate (specified by RBI). 42(1C) – RBI may specify any transaction or class of transactions to be regarded as liability in India of a scheduled bank. If any question arises as to whether any transaction or class of transactions shall be regarded as liability in India of a schedule bank, the decision of RBI thereon shall be fina...

Reserve Bank of India Act, 1934 – Part-V – Section 45B to 45JA

The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the Reserve Bank of India (RBI). In a series of articles, we will briefly go through the provisions of RBI Act, 1934. This is the fifth article in the series.  Chapter IIIA - Collection and Furnishing of Credit Information Section 45B – Power of Bank to collect credit information RBI may collect credit information from banking companies and furnish it to any banking company in accordance with section 45D. Section 45C – Power to call for returns containing credit information RBI may direct any banking company to submit statements relating to credit information. Section 45D – Procedure for furnishing credit information to banking companies A banking company may apply to RBI to provide credit information. RBI shall furnish the requested credit information without disclosing the names of the banking companies which have submitted the information. RBI may levy fees of up to Rs.25 for furnishing credit...