When you receive salary arrears, advance salary, gratuity, VRS or commuted pension in one year for services of earlier years, the lump sum can push you into a higher tax slab. Section 89(1) lets you claim relief so you pay tax roughly as if the income had arrived in the correct years. You must file Form 10E online on the income-tax portal before filing your ITR — otherwise the relief is disallowed.
Form 10E — File It Before Your ITR
Form 10E is the online statement that supports a Section 89 claim. If you claim relief in your income tax return without first filing Form 10E, the department disallows the relief and issues an intimation/demand under Section 143(1).
- Log in to incometax.gov.in → e-File → Income Tax Forms → File Income Tax Forms → Form 10E.
- Fill Annexure I (salary arrears/advance) with year-wise income and tax; the portal auto-computes the relief figure.
- Submit Form 10E, then enter the same relief amount in the "Relief u/s 89" field of your ITR.
- There is no fee for Form 10E, and it must be filed every year you claim relief — it is not a one-time form.
Claiming relief in the ITR but forgetting to file Form 10E first. The portal accepts the ITR, then a 143(1) intimation removes the relief and raises a demand. Always file Form 10E and note its acknowledgement number before you submit the return.
Received arrears this year? Let TaxClue file Form 10E and your ITR together.
Get Form 10E Filed →Section 89(1) Relief — 5-Step Calculation
Relief is the extra tax caused by bunching the arrears into the receipt year, minus the tax those arrears would have added had they fallen in their original years. If that difference is positive, it is your relief.
| Step | What to compute | Symbol |
|---|---|---|
| 1 | Tax on receipt-year income with arrears | A |
| 2 | Tax on receipt-year income without arrears | B |
| 3 | Extra tax in receipt year | A − B |
| 4 | Tax on each arrear year with its arrears | C |
| 5 | Tax on each arrear year without its arrears | D |
| Relief | (A − B) − (C − D), if positive | Relief |
If (A−B) is not more than (C−D), there is no relief — the arrears simply sit in your current-year income. Compute steps 4-5 separately for each year the arrears relate to.
Receipt year (arrears bunched)
Spread over the correct years
(A − B) ₹60,000 minus (C − D) ₹25,000 = ₹35,000 of Section 89 relief. Figures are illustrative — actual relief depends on your slab, the regime chosen in each year and other income. Use the income tax calculator to model your own numbers.
Not sure which regime gives you a bigger 89 relief? We compute both.
Talk to a Tax Expert →Which Payments Qualify for Section 89 Relief
Section 89 relief is for salary and salary-like receipts bunched into one year. Discretionary payments and non-salary income do not qualify.
| Payment type | 89 relief? | Notes |
|---|---|---|
| Salary arrears (prior-year unpaid wages) | Yes | The most common case — 7th Pay Commission arrears, pay revisions, court-ordered dues |
| Advance salary | Yes | Salary of future years received now |
| Gratuity above the exemption | Yes | Taxable excess over the Sec 10(10) limit — see gratuity tax |
| VRS compensation above ₹5 lakh | Yes | Excess over the Sec 10(10C) exemption |
| Commuted pension (taxable part) | Yes | Sec 10(10A) exemption applies first |
| Family pension arrears | Yes | See family pension tax |
| Bonus / ex-gratia / gift | No | Discretionary — not arrears of salary due |
| Business income, capital gains, interest | No | Section 89 covers salary-type income only |
For gratuity/VRS, the statutory exemption is applied first; Section 89 relief is then available on the balance that is taxable and bunched.
Does the Tax Regime Affect 89 Relief?
Section 89 relief works under both the new (default) and old regimes — it is not a Chapter VI-A deduction. But the relief amount differs because each regime's slab tax on income "with vs without" arrears differs. For AY 2026-27 the new regime offers a ₹75,000 standard deduction and rebate up to ₹12 lakh taxable income; the old regime keeps ₹50,000 standard deduction and Chapter VI-A deductions. Compute relief separately in the regime you actually use in each year.
New regime (default AY 2026-27)
- Standard deduction ₹75,000 on salary
- Rebate u/s 87A up to ₹12L taxable income
- Most Chapter VI-A deductions not available
- 89 relief still allowed on bunched salary
Old regime (optional)
- Standard deduction ₹50,000 on salary
- 80C/80D and other Chapter VI-A deductions
- Rebate u/s 87A up to ₹5L taxable income
- 89 relief allowed; often larger where slabs differ
Section 89 Relief & Form 10E — FAQs
Related TaxClue services
Salary Arrears? Claim Section 89 Relief the Right Way
From filing Form 10E to computing relief in both regimes and filing your ITR, TaxClue's tax team makes sure your Section 89 claim actually sticks — 100% online, across India.