Section 89(1) Relief on Salary Arrears: Formula + Form 10E Steps
Got arrears that pushed you into a higher slab? Relief = (extra tax now) − (extra tax if paid on time). File Form 10E BEFORE your ITR — skipping it is the #1 reason relief gets denied.
The 89(1) formula (X − Y)
| Step | Compute |
|---|---|
| X — extra tax in receipt year | Tax on (income + arrears) − tax on (income alone), at this year's slabs/regime |
| Y — extra tax in due year(s) | Tax on (that year's income + arrears) − tax on (that year's income), at that year's slabs/regime, year-wise |
| Relief | X − Y (if positive) — claimed in the ITR's Section 89 field |
Form 10E in 5 steps (before ITR!)
- Get a year-wise arrears breakup letter from your employer first.
- Portal → e-File → Income Tax Forms → Form 10E → select arrears/advance/family pension.
- Enter receipt-year + each due-year's income; the portal computes per-year tax.
- Preview, e-verify and submit — save the acknowledgement number.
- File ITR with the same relief figure in the Section 89 schedule.
By TaxSetu Editorial Team · Last reviewed: 7 October 2026
Based on the Income-tax Act 2025, Income Tax Rules 2026 and CBDT notifications; sections per the Income-tax Act 1961 (as amended) with 2025-Act mappings where notified · Verify on the official portal: incometax.gov.in
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Frequently Asked Questions
Relief = X minus Y: X is the extra tax on arrears at this year's slabs, Y is the extra tax if the arrears were taxed in their due years. The positive difference reduces this year's tax.
Effectively yes — file Form 10E on the portal BEFORE your ITR with a year-wise employer breakup. Skipping it is the top reason relief gets denied. All employee forms.
Yes — arrears, advance salary, family-pension arrears and taxable in-service leave encashment all qualify; each year's tax is recomputed at that year's slabs.
Each due year's own slabs and regime — if you used the old regime that year, Y is computed under the old regime.