Tax relief under section 89(1) on salary arrears

By | 05/15/2018

Amount paid by the employer in the head of the arrears of salary, have you ever thought of tax relief under section 89(1) on salary arrears:

No,

Most of us don’t know about relief under section 89

Most of the employee says it “relief 89” 🙂

Let’s understand:

What is tax relief under section 89(1) on salary arrears

Calculation of income tax depends on the income of the assessee, arrears is the part of the income which was received in the current years of last year.

Means the amounts which we suppose to get last year, is getting in the current year.

The amount of arrear turn your income higher and it will drag you to a higher tax slab.

Although the amount received in the current years which is supposed to get in the previous year is due to the process of the employer, you are liable for the tax.

Also Read: What is Form 15G Form 15H?

In this scenario, the tax department allow the assessee a relief under section 89(1)

To avail the benefit of section 89(1), it is mandatory to fill a form 10e

It is important to understand the claim under section 89(1) of income tax act and fill the form 10E

Calculation for relief under section 89(1)

Relief under section 89 with example:

I like to share my personal example with you along with step by step process to get the benefit of reimbursement tax amount paid.

An amount of ₹ 1,00,000 in FY 2017-18 as arrears which, I was supposed to get in FY 2014-15.

I am working in the multinational company and my earning in FY 2017-18 including arrears is  5,28,000, tax paid for FY 2017-18 is ₹ 32,150.

on the other hand, my earning in FY 2017-18 excluding arrears is  4,28,000, tax paid for FY 2017-18 is ₹ 22,350.

Subtracting the value of both the tax paid amount is ₹ 9,800.

let’s go back:

In FY 2014-15 my earning including arrears is  3,51,000, tax paid for FY 2014-15 is ₹ 18,780.

& In FY 2014-15 my earning excluding arrears is  2,51,000, tax paid for FY 2014-15 is ₹ 12,780.

After Subtracting the value of both the tax paid amount is ₹ 6,050.

In the Final step:

Subtracting both the differences we get ₹ 3750

That is the amount we can get relief under section 89(1) by filling of form 10E

What is Form 10 E of income tax department

To claim the amount back under section 89(1) which was paid to due arrears, it is mandatory to fill the form without filling the fill you cannot claim back the amount.

Also Read: How income tax department treat consultancy income?

Form No 10 E

A procedure of filling Form 10 E

Filling of Form E is very easy, you can fill the form just by login into income tax portal click here:

Login income tax

After login into the website, you have to click the tab button “e-file” and select “Income Tax Forms” on the second in the row.

File Form IT

Next step is to choose Form no 10E – Form from relief u/s 89 from the drop-down menu and fill the assessment years for which you need to fill 10E, select the submission mode and click continue.

Login 10 E form

Income Tax Notice for non-filing of Form 10E

From FY 2014-15 it is declared mandatory by the income tax department to fill Form 10E for claim relief under section 89(1).

Also Read: Highlight key changes under ITR1 from FY 2018-19

The assessee who claim relief under section 89(1), but unable to fill Form 10E, will get income tax notice revealing:

The relief u/s 89 has not been allowed in your case, as the online form 10E has not been filed by you.

The furnishing of Online form 10E is required as per sec.89 of the Income Tax Act”

Step by step guide to filling form 10E annexure 1

Filling of Form 10E annexure 1 is very easy and will be submitted in a few steps only.

After selection of Form 10E you will get this:

Instruction form 10E

There is 7 general instruction on the instruction tab button, it is recommended to read the instruction carefully.

After selecting Form 10E, maximum information is already fetched from PAN card, you only have to select the Annexure I, which is specified for “arrears or advance salary”.

Annexure I of Form 10 E

Annexure 1 Form 10E

All you have to do is read every point twice and fill the actual figure from the above point no 1.

  • In point 1 – you have to insert total income received in FY for example 2017-2018
  • In point 2 – whatever salary or advance you have received required to insert in the column
  • Point 3 –  shows you the total income received along with arrears.
  • Point 4 – according to point 4 you need to enter the figure (tax on total income including arrears), you have calculated after taking benefit of all tax exemptions under section 80C, in some cases, arrears amount drag you into tax slab.
  • In point 5 – you need to enter the figure (tax on total income excluding arrears), you have calculated after taking benefit of all tax exemptions under section 80C.
  • You will get difference figure automatically in the box of point no 6.

Also Read: What is Form 26AS (How does it work filling IT return)

Point 7 “Tax computed with Table “A”

Table A is a separate calculation sheet which in result provide a figure which will fetch in point 7.

Table A annexure 1

Table A is also required to fill out the information correctly:

  • First, enter the previous years in the format (XXXX-XX) for example in you are talking about 2016-2017, you have to enter (2016-17).
  • In the second column, you have to enter the amount of total income in previous years 2016-17.
  • You have to the amount of arrears or advance you received with respect to FY 2016-17 in the third column.
  • Point number 4 is very tricky this column automatically add the amount of column 2 and 3, and tell you if you receive the arrears in the same financial years what would be the amount you will get.
  • In point 5 you have to enter the amount of tax you have already paid for the total income relevant to the previous year.
  • In point no 6, you have to recalculate and enter the tax amount manually considering the arrears into account (the tax amount you paid if you get the arrears amount in the previous year).
  • Column 7 provides you the difference of tax amount already paid and paid if arrears received in the same year.

This amount (column 7) will carry forward to above table annexure 1 column 7.

Finally, you will the amount of relief under section 89(1)

After getting the figure and submission of the Form 10E, the final step is you have to enter the figure in column D6 of part ‘D’ – computation of tax payable – “relief under section 89(1), which is mentioned in the ITR 1 form.

relief u/s 89(1)

Other annexures are also available in form 10E are required to fill as per requirement.

It is mandatory to fill Form 10E for claiming relief u/s 89(1) and before filling ITR form.

Also Read: Fill Income tax return ITR1 in 5 Minutes: The Complete Guide

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Amit Bansal
Amit Bansal
Hey, Amit Kumar Bansal, the man behind this blog. I always passionate about Taxes, Stock Market. This was one of the reasons why I have chosen the field of account. Blogging was not the coincidence it was a proper decision. The main aim of this blog is to help readers to take an informed financial decision. If you like my efforts kindly subscribe to this blog and also let your friends know about this website by sharing.

50 thoughts on “Tax relief under section 89(1) on salary arrears

  1. Anju

    Sir your blog is very helpful but one thing I want to ask about10E form . Which income sholid i fill Gross total income or total income (after 80c and other)

    Reply
    1. Amit Bansal Post author

      Hello Anju, You must fill Gross income in Form 10E (Column no 2), but tax calculation in (Column no 5), must be calculated taking Gross income as base and deduct all deduction under section 80C.

      Thanks 🙂

      Reply
  2. Priyesh Kumar

    Kindly explain the situation that I have for FY 2016-17
    Gross Income: 4,48,000/-
    Saving u/s 80C: 1,50,000/-
    whatever tax was paid got refunded for FY 2016-17
    In FY 2017-18 I have arrear of Rs. 40,415/-

    Then what to fill in column 5 & 6 of Table ‘A’

    Reply
    1. Amit Bansal Post author

      According to your question, there is two scenario:

      First: In FY 2016-17 Gross income is 448000/- and after deduction u/s 80C 150000/- You paid Tax of Rs (Say) 5000/-
      Second: If you receive the arrear amount in the same year (2016-07) then your gross income increases by 488115/- and after deduction u/s 80C 150000/- You have to pay Tax of Rs (Say) 6000/-.

      So, In column 5, you have to enter amount what you actually paid.
      and in column 6, you have to enter the amount which will pay if you received the arrear amount in the same year.

      As per figures above:
      You have to enter Rs 5000/- in column 5 & Rs 6000/- in column 6.

      Thanks 🙂

      Reply
      1. Priyesh Kumar

        Thank u sir for ur reply

        Again I have confusion suppose I had paid 5000 Rs Tax but after filing ITR for AY 2017-18 whole tax which was deducted got refunded. It means I hadn’t paid any tax. At the same time if I deduct investment u/s 80C from Gross income my tax liability is becoming zero considering rebate of Rs. 5000/- for income below 5 Lakh.

        Then my confusion is whether I should fill Rs. 5000/- or Rs. 0/- in column 5
        And if I consider arrear for previous year then suppose I would have to pay additional 1000 Rs as Tax

        Then in column 6 I should fill Rs. 6000/- or Rs. 1000/-

        Reply
        1. Amit Bansal Post author

          Hello Priyesh,

          In your previous scenario and considering 80C and rebate your tax amount is nil, So in column no 5, you have to enter (O) zero.

          Now you have to recalculate your tax amount considering your arrears in the same year. (that means if you get your additional amount along with your salary at the same time, what you should consider in income? the whole amount. Right).

          For instance: If your salary amount is 50000/- per month, you are considering 6 Lakhs, right and you are calculating accordingly, Now you received your arrears of 5000/- per month in next FY, right.

          My point if you receive 5000/- along with your salary at the same time i.e. 55000/-, your total income will be 7.2 Lkahs. Ok

          You have to calculate the Tax amount considering 7.2 Lakhs as gross then deduct 80C and rebate, whatever tax amount you figure out, would be entered in column no – 6.

          Thanks 🙂

          Reply
          1. Priyesh Kumar

            Thank u very much, now i have got all my confusion clear. Now I can file ITR with ease. I was googling about this topic for the last 3-4 days then I found ur blog, u explained very well & also ur reply was very prompt. I appreciate ur effort.

  3. NARENDER SINGH

    An employee received arrears of salary for last ten years in the year 2015-16. He made form 10E and claims relief in AY-2016-17. Again in year 2017-18, he receives some more arrears of that 10 years. In this situation which amount is to be considered for Form 10E? Actual amount of Last 10 years of salary or Actual amount plus arrears of salary received in year 2017-18? Thanks in advance

    Reply
    1. Amit Bansal Post author

      Hello Narender Singh Sir, The employee required to enter both the amount first – actual amount and the tax he calculated accordingly and second – actual amount plus arrears and he had to recalculate the tax. There is separate column given in Form 10E to mention.

      Thanks:)

      Reply
  4. pradeep kumawat

    what is maxim year count for 10e.
    if arrear from 1995 to 2018

    Reply
    1. Amit Bansal Post author

      Hello,

      Form 10E is filled by adding rows for the years you have received arrears amount of.

      Reply
  5. AVI

    I recevied arrear of FY 2015-16 in FY Year 2017-18 amount is 74382 /-
    salary recevied in FY 2015-16 only 32014/-
    Total salary recevied in FY Year 2017-18 is 572014/- ( arrear+salary)
    Salary of FY Year 2017-18 is 497632/-
    please guide me how to fill and calculate a ANNEXURE 1 table A
    MY invest ment is 150000.

    Reply
    1. Amit Bansal Post author

      Hello,

      First, mention your FY i.e. 2015-16 in column 1 of Annexure 1, In column 2 you have to insert actual income of 2015-16 (which you have already mentioned in your ITR return 2015-16), In column 3, the arrear amount you have received in 2017-18 i.e. 74382/-.

      Column 4, bring you the total of 2&3, (according to them if you’re received the arrear amount in the same Financial years i.e. arrear amount in 15-16, your income will be 106396/- (74382 + 32014) ).

      In column 5, you have punch the tax amount you have calculated and mention in the ITR (taking a base of actual income 32014).
      In column 6, you have to recalculate the tax amount (taking your total income including arrears (74382 + 32014).

      Column 7, provide the difference of 6 & 5, and that amount will be forwarded of a portion of the ITR form relief u/s 10(E).

      Thanks:)

      Reply
      1. John Jacob

        Hi Sir,
        I recieved NPS component(employers contribution) as arrears in this years. This arrear was taxed as it was more than the limit(10% of salary). I am planning to fill form 10E and get relief as my NPS employer contribution is only 7% of salary each year(so should be fully tax excempted).

        Can you please let me know if the tax calculated in column 6 of Table A(Form 10E) would increase?

        So when i enter details in TableA(10E) income in column 4 would increase but tax in column 5 and 6 would remain same(considering that the arrear in column 3 is NPS component and fully tax excempted). Is this correct?

        How will the executive checking my returns know that the arrears I entered in column 3 is fully tax excempted?

        Thanks in Advance

        Reply
        1. Amit Bansal Post author

          Hello John Jacab,

          Table 10 (E) Column 4 figure will increase due to the arrears additional amount (if) received in previous years. Column 5 amount is fixed (which you have already calculated in previous years and filled your tax accordingly). But as far as column 6 is a concern you have to recalculate the tax amount considering your arrears into your account for the previous years (you are entering in column 1).

          Reply
  6. Abhijit Kundu

    sir,
    I have submitted form 10E followed by IT return for AY 2018-19. I have claimed refund of Rs. 3780. But in intimation u/s 143, IT Dept. have shown nil refund! Can you please help me?

    Yours faithfully
    Abhijit Kundu

    Reply
  7. Mangal Singh Rawat

    Form 10e annexure 1 table A what is the meaning of previous year, previous assesment year or previous financial year? Please explain it.

    Reply
    1. Amit Bansal Post author

      Hello,

      The amount of arrears you received for FY (for instance 2016-17), that would be the year you have to enter.
      Thanks:)

      Reply
  8. Swathi S

    Hi Good Morning,

    I received my salary arrears in 2018-19 for the fy 2017-18 and filed form 10E and submitted form 10E to my employer for further TDS but their query is how to show last year salary in TDS form as their is no provision in TDS form.

    Reply
    1. Amit Bansal Post author

      Hello,
      Firstly, You don’t need to submit your Form 10E to your employer, While filling ITR of 2018-19, you must submit form 10E mentioning the details of 2017-18 and the Difference in tax will be carried forwarded to section relief u/s 89 and that amount will be deducted from your tax. If your tax amount is nil, then after filling ITR you will get the refund of that amount.

      🙂

      Reply
  9. Jitender

    I have received arrears of salary for last 9 years in the FY year 2015-16. Again in the FY year 2016-17, received some more arrears of 10 years. Both the times I claimed relief U/S 89 but failed to submit form 10E. Now Income Tax Department issued two separate notices for both the cases. In this situation what should I do? Should I submit form 10E for these years separately? If so, which amount is to be mentioned in the form 10E of FY 2016-17, in the column for “Total income of the relevant previous year”? Is that the amount showed in the form 10E for the FY year 2015-16, in the column for “Total income (as increased by salary received in arrears or advance) of the relevant previous year as mentioned in column (1) [Add columns (2) and (3)]”?
    Thank you very much for your kind efforts.

    Reply
    1. Amit Bansal Post author

      Firstly you can not claim u/s 89 without submitting Form 10E. Currently, you can not revise your return you only have to comply with the notice and pay the penalty with interest.

      Don’t forget to fill Form 10E for claiming u/s 89.

      Thanks 🙂

      Reply
  10. Atul

    Sir in 10E form I wrote Taxable income in place of Total income. What should I do? It will be processed or rejected ? Can I revise my 10E? What should I do?

    Reply
  11. Hemlata singh

    I need to fill form 10 E as i have received arrear for two FY 15-16 and FY 16-17 in FY 17-18.
    gross income or net income(after ded savings) for corresponding FY needs to be filled in form 10E ?
    please guide me.
    I recieve only Rs.1100 as HRA but pay about 5500 as actual rent. can I claim HRA exemption under 80GG by filling Form 10BA?

    Reply
  12. NIPIN DHANDARIA

    I have received salary arrear in F Y 2015-16 amounting to Rs. approx 2 Lac for different previous year i.e. 2014-15, 2013-14, 2012-13, 2011-12 and 2010-11. However I forgot to claim the relief u/s. 89(1) while filing the ITR for FY 2015-16.

    My question is can i file form 10E for FY 2015-16 (as the Income tax allowing me to file the 10E for FY 2015-16) now and claim the relief u/s. 89(1) in ITR of FY 2017-18 ? if yes how.

    Reply
    1. Amit Bansal Post author

      Hello Nipin.

      If you have received your arrears amount in FY 2015-16, you have to claim arrears u/s 89 after filling Form 10E, In your case, you can revise your return, but its 3 years old, you can not revise or change your 3 years old return, as the assessment is already done.

      Thanks 🙂

      Reply
  13. Vyas Jagdish

    Sir,
    My employer deduct TDS of Salary in FY 2013-14 which I was got hence I was filled ITR indicating gross income of salary which I was not got in that year. This salary I was got in FY 17-18. Now I am calming 10E under sec 89 relief .
    But How I will get return of Tax paid in year 2013-14 without getting salary .

    Reply
    1. Amit Bansal Post author

      Hello Vyas,

      Form 10E u/s 89 is used to get the benefit of taxes on salary arrears received. secondly, If we talk about FY2013-14, you can not revise your return in any condition.

      Thanks 🙂

      Reply
      1. Amara

        Hello sir,
        I received arrears for jul 2016 – Sep 2017 in the month of Oct 2017. But my 26AS is not showing my 12 month salary but only 2 month salary. Shall I have to include my arrears in my itr and submit form 10E? Is it necessary when 26AS not reflecting full salary?

        Kindly guide.

        Reply
        1. Amit Bansal Post author

          Hello,

          Yes, you have to include your arrear amount in your ITR as gross income even if the amount is not shown in FORM 26AS you must submit form 10E for the month of July 2016- March 2017 for the ITR AY 2017-18.

          Thanks 🙂

          Reply
          1. Amara

            Sir ,
            I am confused. I got arrears in FY 2017-18. What is the AY I have to select for Form 10E? AY 2017-18 or AY 2018-19

          2. Amit Bansal Post author

            If you are filling return for 2017-18 that means you are filling for FY 2017-18 and the same period is said to be AY 2018-2019.

    1. Amara

      Hello sir,
      My gross salary in 2016-17 as per ITR filed last year is 178278 and 80c savings are 43438.

      My gross salary in 2017-18 is 857486 out of which 411628 is arrears of 2016-17 and 2017-18 itself.

      After splitting, arrears of 2016-17 is 241120 and 2017-18 is 170508.

      By this my gross salary of 2016-17 is 419398
      and gross salary of 2017-18 is 616366. My 80c savings
      in 2017-18 is 155557.

      As per the guidelines given by you above,
      Annexure 1
      Point 1. ……..616366
      Point 2…………241120
      Point 3…………857486
      Point 4……………50976
      Point 5……………10063
      Point 6……………7596
      Point 7……………33317

      Table A
      Column 1…… 2016-17
      Column 2……178278 (as per previous itr)
      Column 3……241120
      Column 4……419398
      Column 5…….0
      Column 6…….7596
      Column 7……7596

      Sir,
      I request you to kindly verify my above calculation whether it is correct or not for submitting my form 10E. Please guide.

      Reply
      1. Amit Bansal Post author

        First of all the amount 170508, you can not treat this as arrears if we are talking about 17-18 that is income.

        Column 1…… 2016-17 – correct
        Column 2……178278 (as per previous itr) – correct
        Column 3……241120 – correct
        Column 4……419398 – correct
        Column 5…….0 (You have to enter the amount you have paid in 16-17)
        Column 6…….7596 (you have to recalculate and enter the tax amount manually considering the arrears into account in 16-17)

        Colomn 7 will give you the difference amount at which you will get the exemption.

        Thanks 🙂

        Reply
        1. Amara

          Understood sir, that is why I included up 170508 in 616366 in point 1 of annexure 1.

          Secondly, my income in 2016-17 was nontaxable, that’s why column 5 is filled by 0. In 2016-17 my 80c savings 43438. So I think column 6 amount is 7596.

          Kindly check n guide sir because due date is nearby.

          Reply
          1. Amit Bansal Post author

            Ok If your income of 2016-17 (without adding arrears is nontaxable), which you have already declared is zero. It’s OK. Secondly, after adding arrears amount in the gross income of 16-17 and after all deduction, your tax amount comes 7596. then it’s OK. You can Go ahead!

            Thank You.

  14. Kamlesh

    I have received arrears of salary for last 10 years in the FY year 2017-18 Again in the FY year 2017-18 received some more arrears of 10 years. Should I submit form 10E for these years separately? If so, which amount is to be mentioned in the form 10E of FY 2018-19, in the column for “Total income of the relevant previous year”? Is that the amount showed in the form 10E for the FY year 2017-18, in the column for “Total income (as increased by salary received in arrears or advance) of the relevant previous year as mentioned in column (1) [Add columns (2) and (3)]”?

    Reply
    1. Amit Bansal Post author

      Hello Kamlesh,

      There is a provision in Form 10E to add more than on year details, You don’t require to submit Form 10E separately. In column 2 “Total income of the relevant previous year”. you have to enter the amount of the relevant years, for example, if you have received arrears of 15-16, you have to enter the Total income of the relevant year without arrears. arrears amount will be entered in column 3.

      Thanks 🙂

      Reply
  15. Raghavendra Kushavaha

    Sir I have got arrear of financial year 2016-2017 in year 2017-2018 so while filling form what should I fill as previous year and while selecting form 10 e what should I fill as assessment year

    Reply
    1. Amit Bansal Post author

      Hello,

      While filling form previous year should be 2016-2017, and If you are filling for 2017-18, your assessment year would be 18-19.

      Reply
  16. Abhinav

    Hi Sir,
    I have filled the form 10E with taxable income instead of gross income. Also arrear filled in the form 10E is different from one that is mentioned in form 16 by company. I have added arrear of HRA in it also.

    Can you tell me, which arrear do i have to fill as my ITR is returned by CPC Bangalore with zero tax relief.

    Thank you

    Reply

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