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.
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.
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:
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.
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:
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 filing service to get your Form 10E as well as income tax return e-filed.