Filing Form 10E is mandatory to claim Relief under section 89(1)

What is relief under section 89(1)?

Tax is calculated on your total income earned or received during the year. If your total income includes any past dues paid in the current year, you may be worried about paying a higher tax on such arrears (usually tax rates have gone up over the years).

To save you from any additional burden of tax due to delay in receiving income, the tax laws allow a relief under section 89(1). If you have received any portion of your salary in arrears or in advance, or your have received family pension in arrears, you are allowed some tax relief under section 89(1) read along with Rule 21A.

In simple words you are saved from paying more tax because of delay in payment to you.

Relief Calculation Procedure under section 89(1)

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

Here’s how you can calculate the tax relief yourself –

Step 1 Calculate tax payable on the total income, including additional salary – in the year it is received

Step 2 Calculate tax payable on the total income, excluding additional salary – in the year it is received

Step 3 Calculate difference between Step 1 and Step 2

Step 4 Calculate tax payable on the total income of the year to which the arrears relate, excluding arrears

Step 5 Calculate tax payable on the total income of the year to which the arrears relate, including arrears

Step 6 Calculate difference between Step 4 and Step 5

Step 7 Excess of amount at Step 3 over Step 6 is the tax relief that shall be allowed.

Note that if amount at Step 6 is more than amount at Step 3 no relief shall be allowed.

Once you have calculated this amount – you can enter the values on Click N Tax and proceed to file your return.

If you need help or have any questions, write to us support@clickntax.com and we will be happy to assist you!

Income Tax Notice for non-filing of Form 10E

Starting income tax returns for financial year 2014-15 (assessment year 2015-16), the income tax department has made it mandatory to file Form 10E if you want to claim relief under section 89(1). Download Form 10E.

Taxpayers who have claimed relief under section 89(1) but have not filed Form 10E have received an income tax notice from the tax department with the following lines –

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

How to file Form 10E

Form 10E can be filed online. Here are the steps to file Form 10E online –