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Filing Form 10E to Avail Tax Relief u/s 89(1)

Last Update Date : November 02, 2018

What is relief u/s 89(1)?

Your tax liabilities for a Financial Year are calculated from the income earned by you during that year. Sometimes, that income includes arrears (past dues paid in the current year). Usually tax rates increase with time which means that you may have to pay higher taxes in such case. However, Income Tax Act provides you relief in those situations u/s 89(1). This is simply based on the principal that you should be liable to pay the taxes on your income based on the tax rates applicable for the year to which the income pertains.

If you have received any portion of your salary in arrears or in advance, or you have received family pension in arrears, you can avail some tax relief under section 89(1) read along with Rule 21A.

What is form 10E?

To claim relief u/s 89(1), you must file Form 10E. Taxpayers who claim relief u/s 89(1) without filing Form 10E receive notice from the Income Tax Department regarding the same.

Image of Form 10e Sample Format

Is it mandatory to file Form 10E?

From A.Y. 2015-16 the tax department has made it mandatory for the person claiming the relief u/s 89 to file an online Form 10E on the tax department’s e-filing portal. Those who missed or skipped to file this form were not allowed the relief while processing their tax returns and may have even received the notice for non-filing of Form 10E.

Procedure to Calculate Relief under Section 89(1)

Before you file form 10E to get tax relief, you need to calculate the amount of relief you are eligible for. It can be calculated by following the given procedure:

  • Find out the tax payable on your total income (including arrears) of the relevant previous year in which the same is received. Let’s call it “X”.
  • Find out the tax payable on your total income (excluding arrears) of the relevant previous year in which the same is received. Let’s call it “Y”.
  • Subtract the value obtained in step 2 from the value obtained in step 1 (i.e., X – Y). Let’s call it “Z”.
  • Find out the tax payable on your total income (including arrears) of the year to which your arrears are related. Let’s call it “A”.
  • Find out the tax payable on your total income (excluding arrears) of the year to which your arrears are related. Let’s call it “B”.
  • In case the arrears relates to more than one year, repeat the step listed in step 4 & step 5 for all the years to which the arrears relates and total the figures arrived at step 4 & step 5
  • Subtract the value obtained in step 5 from the value obtained in step 4 (i.e., A – B). Let’s call it “C”.
  • Excess of tax computed at step 3 over tax computed at step 7 is the amount of relief allowable under section 89. If tax computed at step 3 is less than tax computed at step 7 then you will not be eligible for any relief.

Form 10E filing procedure in 4 Simple Steps:

  1. Go to https://incometaxindiaefiling.gov.in/ and login with your ‘User ID’ (i.e. PAN), ‘DOB’ and ‘Password’.Section 89 of Income Tax Act - Filing Form 10e
  2. Now click on tab titled ‘e-File’ and select ‘Prepare & Submit Online Form (Other than ITR)’ from the drop down menu.Relief under section 89 by filing form 10e
  3. Choose ‘Form 10E’ from the drop down menu, fill the relevant Assessment Year and press ‘Continue’ button.how to file form 10e online
  4. You will find the screen shown below with instructions to e-file Form 10E.
    Click on all the blue tabs one by one and fill relevant details.
    Click on ‘Submit’ once you are done to complete the process.
    In case if you are not able to complete the whole process at one go you can save the information filled by clicking on the ‘Save Draft’ button at the bottom of the screen and complete it any time later.
    In case if you have saved form 10E in draft you can complete it later by following the same process flow as stated above.Form 10e online filing

Understanding Calculation of Relief under Section 89(1) with Example

Let’s say Mrs Neha earned Rs 5,20,000 as total income in FY 2017-18 including Rs 1,00,000 as arrears of salary for FY 2012-13. Her salary in FY 2012-13 was Rs 3,20,000. In this situation, the relief which Mrs Neha can claim will be as per the given calculation.

  • Step 1: Tax payable on the total income including arrears, i.e. Rs 5,20,000 for the FY 2017-18 = Rs 29,870
  • Step 2: Tax payable on the total income excluding arrears, i.e. Rs 4,20,000 for the FY 2017-18 = Rs 15,450
  • Step 3: Subtracting the value obtained in step 2 from the value obtained step 1, i.e. Rs 29,870 – Rs 15,450 = Rs 14,420
  • Step 4: Tax payable on the total income including arrears of FY 2012-13, i.e. Rs 4,20,000 = Rs 22,660
  • Step 5: Tax payable on the total income excluding arrears for FY 2012-13, i.e. Rs 3,20,000 = Rs 12,360
  • Step 6: This step is not required in this case because arrears are related to one year & not multiple years
  • Step 7: Subtracting the value obtained in step 5 from the value obtained in step 4, i.e. Rs 22,660 – Rs 12,360 = Rs 10,300
  • Step 8: Subtract the value obtained in step 6 from the value obtained in step 3, i.e. Rs 14,420 – Rs 10,300 = Rs 4,120

Frequently Asked Questions

Can I file Form 10E after filing my tax return?
It is recommended to file Form 10E before you file your tax return otherwise you may receive a notice from the tax department for non-compliance.

Do I need to attach a copy of form 10E filed online, with my Income Tax Return?
Since Form 10E is filed online on I-T department’s website, there is no need to attach a copy of Form 10E or any other proof of it with your ITR.

Can I get tax relief from my employer after filing tax return?
You need to submit a proof that you filed Form 10E if you want to get tax benefits from your employer.

Which Assessment bar shall I choose while filing form 10E?
The Assessment Year you choose should be of the Financial Year to which the arrears belong, while filing Form 10E.

How to fill Table A of the Form 10E?
When filling table A, you need to provide the following details:

  1. Detail of previous year for arrears received.
  2. Total income of previous year excluding arrears
  3. Arrears received related to previous year
  4. Total income of previous year including arrears: Total of 2 and 3
  5. Tax on total income excluding arrears: Tax on 2.
  6. Tax on total income including arrears: Tax on 4
  7. The value obtained by subtracting the value obtained in 5 from the value obtained in 6

Other annexures (if applicable) are required to be filled as per the salary details.

You need to file your Form 10E before you file your income tax return. You can avail H&R Block’s online tax e-filing service to get your Form 10E as well as income tax return e-filed.

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