You got a salary hike in 2025, and your employer paid you the arrears for the last two years in one go. Your bank account looks great. Your tax bill does not. Because the entire arrear lands in this year’s income, it can push you into a higher slab, and you end up paying more tax than if the money had arrived on time.
The Income-tax Act has a fix for exactly this situation: relief under Section 89(1). The only way to claim it is by filing Form 10E on the e-filing portal before you file your income tax return.
Form 10E is the online form on the income-tax e-filing portal that lets you claim relief under Section 89(1) when salary, pension or income is paid to you in arrears or in advance. Filing it before your ITR spreads the arrears back to the years they belong to, so you do not pay extra tax because the money arrived late.
Quick answer — at a glance
- What it is: Form 10E is the electronic declaration through which you claim tax relief under Section 89(1) of the Income-tax Act, 1961.
- When you need it: salary arrears, advance salary, family-pension arrears, gratuity (non-government employees), commuted pension, or compensation on termination of employment.
- The mandatory order: file Form 10E first, then file your ITR for the same Assessment Year, entering the exact relief figure the form computed.
- What you save: the difference between the tax on the bunched-up income and the tax you would have paid if the arrears had been taxed in the years they belonged to.
- What is changing: from Tax Year 2026-27 the provision becomes Section 157 of the Income-tax Act, 2025 and the form becomes Form No. 39. For AY 2026-27 you still use Section 89(1) and Form 10E.
What changed and what stayed the same
This is the part most blogs have not updated, so read it carefully.
| Aspect | Up to AY 2026-27 (FY 2025-26 and earlier) | From Tax Year 2026-27 (FY 2026-27 onward) |
|---|---|---|
| Legal provision | Section 89(1), Income-tax Act, 1961 | Section 157, Income-tax Act, 2025 |
| Form to file | Form 10E | Form No. 39 (Income-tax Rules, 2026) |
| Computation rule | Rule 21A, Income-tax Rules, 1962 | Prescribed in the Income-tax Rules, 2026 |
Three independent mapping references (TaxGuru’s updated cheat sheet, AAP Tax Law, and an Act-to-Act comparison table) agree that 89 maps to 157, and the CBDT’s 2025 transition framework lists Form 10E as becoming Form No. 39. One table claiming Section 89 becomes Section 221 is the odd one out and does not match the enacted Act.
What stays the same: the idea behind the relief. Whether Section 89(1) or Section 157, the law asks how much extra tax you paid because the income was bunched into one year, and lets you subtract that excess from this year’s tax. The formula, the annexures, and the file-before-ITR rule continue unchanged.
One practical note: transition provisions preserve the old Act for earlier years. If in 2027 you revise or reopen a claim for AY 2026-27, you still use Section 89(1) and Form 10E for that year. The new numbers apply only to income of Tax Year 2026-27 onward.
Who needs to file Form 10E?
File it if, during the financial year, you received any of the following and it pushed your taxable income higher than it would have been in the years it belonged to:
- Arrears of salary — past dues paid now (pay-commission revisions, delayed hikes, back-pay after a dispute).
- Advance salary — paid before the period it is earned for.
- Family-pension arrears — unpaid family pension from earlier years.
- Gratuity — for non-government employees, when paid after the year of termination.
- Commuted pension — the lump-sum portion of pension, to the extent it is not exempt.
- Termination compensation — retrenchment or closure payouts relating to earlier years.
Not eligible where you have already claimed exemption under Section 10(10C) on voluntary retirement or voluntary separation compensation for the same amount. The law blocks the double benefit.
Pensioners: yes, you are covered. Family-pension arrears and commuted pension are specifically listed, and the same relief calculation applies.
Typing a relief figure into the ITR is not enough — the department’s system cross-checks whether a matching Form 10E exists for that Assessment Year. Its own notice wording, quoted by ClearTax, says it plainly: “The relief u/s 89 has not been allowed in your case, as the online form 10E has not been filed by you.” Claims without the form are routinely disallowed at processing, and practitioners report 139(9) defective-return notices in such cases.
How the relief is computed (Rule 21A)
The computation spreads the arrears back to the years they belong to and measures the extra tax caused by the bunching:
Relief = Tax on total income including arrears − (Tax on total income excluding arrears + Tax on the arrears as if received in the years they belonged to)
The portal does this automatically once you enter the year-wise breakup. But understanding the steps helps you enter the right figures and spot a wrong result.
Worked example (figures verified step by step)
Assume this for FY 2025-26 (Assessment Year 2026-27), new tax regime:
- Total income: Rs 26,00,000, of which Rs 6,00,000 are arrears
- The arrears pertain to FY 2022-23, when the taxpayer’s other income was Rs 7,00,000 (also new regime)
Step 1 — Tax on total income including arrears (FY 2025-26)
Taxable income after the Rs 75,000 standard deduction: Rs 25,25,000.
| Slab (Rs) | Rate | Tax (Rs) |
|---|---|---|
| 0 – 4,00,000 | Nil | 0 |
| 4,00,001 – 8,00,000 | 5% | 20,000 |
| 8,00,001 – 12,00,000 | 10% | 40,000 |
| 12,00,001 – 16,00,000 | 15% | 60,000 |
| 16,00,001 – 20,00,000 | 20% | 80,000 |
| 20,00,001 – 24,00,000 | 25% | 1,00,000 |
| 24,00,001 – 25,25,000 | 30% | 37,500 |
| Total | 3,37,500 |
Add 4% health and education cess: Rs 13,500. Tax = Rs 3,51,000.
Step 2 — Tax on income excluding arrears (FY 2025-26)
Rs 20,00,000 minus Rs 75,000 standard deduction = Rs 19,25,000 taxable.
| Slab (Rs) | Rate | Tax (Rs) |
|---|---|---|
| 0 – 4,00,000 | Nil | 0 |
| 4,00,001 – 8,00,000 | 5% | 20,000 |
| 8,00,001 – 12,00,000 | 10% | 40,000 |
| 12,00,001 – 16,00,000 | 15% | 60,000 |
| 16,00,001 – 19,25,000 | 20% | 65,000 |
| Total | 1,85,000 |
Add 4% cess: Rs 7,400. Tax = Rs 1,92,400.
Step 3 — Tax on the arrears as if received in FY 2022-23
FY 2022-23 new-regime slabs (no standard deduction that year): 0–2.5L nil, 2.5–5L at 5%, 5–7.5L at 10%, 7.5–10L at 15%, 10–12.5L at 20%, 12.5–15L at 25%.
Tax on Rs 13,00,000 (7L + 6L arrears): 12,500 + 25,000 + 37,500 + 50,000 + 12,500 = Rs 1,37,500; + 4% cess Rs 5,500 = Rs 1,43,000.
Tax on Rs 7,00,000 (without arrears): 12,500 + 25,000 = Rs 37,500; + 4% cess Rs 1,500 = Rs 39,000.
Tax attributable to the arrears: 1,43,000 − 39,000 = Rs 1,04,000.
Step 4 — Relief
Relief = 3,51,000 − (1,92,400 + 1,04,000) = 3,51,000 − 2,96,400 = Rs 54,600.
So this taxpayer claims Rs 54,600 as relief and pays that much less tax for FY 2025-26. Without Form 10E, the full Rs 3,51,000 would stand.
Note: each year’s computation must use that year’s slabs and regime. If the earlier-year slabs were steeper, the relief can be small or even nil — relief is never negative.
Step-by-step: how to file Form 10E online
- Log in to the e-filing portal at incometax.gov.in with your PAN and password.
- Go to e-File → Income Tax Forms → File Income Tax Forms.
- Select “Persons without Business Income”. Form 10E sits under this category.
- Search for and select Form 10E.
- Pick the Assessment Year that matches the ITR you are about to file. For FY 2025-26 arrears, that is AY 2026-27. This is the most common mistake — the AY on the form and the ITR must match exactly.
- Choose the correct annexure: Annexure I for arrears or advance salary and family pension; separate annexures exist for gratuity, commuted pension, and termination compensation. The wrong annexure misroutes the calculation.
- Enter the year-wise breakup: how much of the arrears belongs to each financial year, and your total taxable income for each of those years (as filed in your ITRs).
- The portal auto-computes the relief. Check that the figure looks reasonable.
- Submit and e-verify — Aadhaar OTP, EVC (net banking, bank account, or Demat), or DSC.
- Note the acknowledgement number and keep the downloaded copy.
- File your ITR and enter the exact same relief amount in the “Relief under Section 89(1)” field. The figure must match Form 10E to the rupee.
Keep ready before you start: the employer’s arrear statement with the year-wise breakup, Form 16 (or Form 130) for the receipt year, and your filed ITRs for the years the arrears belong to. No documents are uploaded — but the breakup you type drives the whole computation.
Practical impact of skipping Form 10E
- Relief denied. The department disallows the Section 89(1) claim at processing if no Form 10E is on record. You pay the full bunched-up tax.
- Defective-return risk. Practitioners report notices under Section 139(9) when the ITR claims relief but the portal finds no Form 10E. The return is treated as invalid until corrected.
- Refund shrinks. If you were counting on the relief to produce a refund, the refund is reduced by the disallowed amount.
- No separate penalty. The law does not fine you specifically for not filing Form 10E. The cost is the lost relief itself — plus interest under Section 234A on the higher tax if your return is filed late.
- Employer TDS is not enough. Your employer deducts TDS on the arrears in the year of payment and may or may not factor in any relief. The formal claim is yours to make through Form 10E.
- Missed it? You may still fix it. Form 10E itself cannot be edited after submission, but you can file a fresh Form 10E and then file a revised ITR (within the revised-return window) with the correct relief figure, provided the original return has not already been processed.
Does Section 89 relief work under the new tax regime?
Yes. The statute does not restrict the relief to either regime — it applies whenever income is “assessed at a rate higher than that at which it would otherwise have been assessed.” The Form 10E utility on the portal does not ask which regime you are under, and it processes the relief either way. One caveat: neither the CBDT nor the department has issued a specific circular on the 89-versus-115BAC interaction, so if a very large amount is at stake, get a professional opinion before filing.
FAQ
Is Form 10E mandatory for claiming tax relief on salary arrears?
Yes. Filing Form 10E is mandatory if you want relief under Section 89(1) (or Section 157 from Tax Year 2026-27). Without the form on record, the department disallows the relief even if you entered it in your ITR.
Can I file Form 10E after filing my Income Tax Return (ITR)?
The correct order is Form 10E first, then the ITR. If you already filed the return without the form, file Form 10E now and then file a revised ITR with the relief figure, as long as the revised-return window is still open and the original return has not been processed.
Is there any penalty for not filing Form 10E?
There is no direct penalty for missing the form. But the relief is denied, which raises your tax bill, and a defective-return notice under Section 139(9) can follow if the ITR shows a relief claim with no matching Form 10E.
Do pensioners need to file Form 10E for arrears?
Yes. Pensioners who receive family-pension arrears, commuted pension, or gratuity belonging to earlier years claim relief the same way — one Form 10E, the same Rule 21A computation, filed before the ITR.
Can I revise Form 10E after submission?
A submitted Form 10E cannot be edited. If you spot an error, file a fresh Form 10E with the corrected details and use its acknowledgement number in a revised ITR.
What if my arrears span several years?
You file one Form 10E for the Assessment Year of receipt and list the year-wise breakup of the arrears inside it — one row per financial year the arrears belong to. You do not file a separate Form 10E for each earlier year.
Official sources
- Income-tax e-filing portal (Form 10E filing and help): https://www.incometax.gov.in
- Income-tax Department website (Act, rules, and circulars): https://www.incometaxindia.gov.in
- Section 89(1), Income-tax Act, 1961 read with Rule 21A; Section 157, Income-tax Act, 2025 read with the Income-tax Rules, 2026 (transition per the CBDT 2025 framework)
Related guides
- TDS on Salary: Section 192 (Now Section 392) – Rates, Calculation and How to Reduce It
- Gratuity Tax in India (2026): How Much Is Tax-Free, ₹20 Lakh Limit, Formula & New Labour Code Rules
- Leave Encashment Tax in India (2026): ₹25 Lakh Exemption, Rules & Section 19 (New Act)
- How to File ITR Online on the Income Tax e-Filing Portal (2026): Step-by-Step Guide
- Missed the ITR Deadline? Belated ITR Filing for AY 2026-27
Reviewed by Asuthod Rathod, CA. Last updated: 20 October 2026.
Disclaimer: This article is for general information only and is not tax advice. Tax rules change through Finance Acts and CBDT circulars; verify the current provisions on incometax.gov.in or consult a qualified tax professional before acting.
Editorial byline for eircicai income tax guides — covering the Income Tax Act, 2025, section renumbering, regime comparison, and deductions. Content is reviewed by Asuthod Rathod, CA.