Mandatory statutory online declaration under Section 89 and Rule 21AA to claim tax relief when receiving salary arrears, family pension arrears, or advance compensation in a higher tax slab
If you claim relief under Section 89 in your ITR without first uploading Form 10E on the e-Filing portal, the CPC will issue a Section 143(1)(a) adjustment disallowing the relief and demanding unpaid tax plus interest.
💡 Form 10E is a mandatory online declaration required under Section 89(1) of the Income-tax Act to prevent taxpayers from being unfairly penalized by higher tax rates when they receive accumulated salary or pension arrears in a lump sum. The relief mathematically spreads the arrears back into the years they were earned, ensuring you pay only the differential tax. Submitting Form 10E online before filing your ITR is legally compulsory; otherwise, the tax department disallows the relief.
Form 10E supports multiple types of retroactive compensation under distinct Annexures.
| Annexure | Type of Payment | Eligible Assessees | Statutory Condition |
|---|---|---|---|
| Annexure-I | Arrears or Advance of Salary / Family Pension | Salaried employees and legal heirs receiving pension arrears | Must pertain to previous financial years |
| Annexure-II | Gratuity for Past Services (over 5 years) | Retiring employees whose gratuity exceeds Section 10(10) limits | Service must be not less than 5 years (for 5-15 years, partial relief; 15+ years, full relief) |
| Annexure-III | Compensation on Termination / Retrenchment | Employees terminated after 3 or more continuous years of service | Unexpired portion of service must be not less than 3 years |
| Annexure-IV | Commutation of Pension | Pensioners receiving lump-sum commuted pension | Service must be not less than 15 years |
Instant online submission and instant generation of electronic acknowledgment number.
100% Free of cost on the Income Tax e-Filing portal.
Any individual taxpayer whose income in the current year includes salary or pension arrears pertaining to previous financial years, resulting in a higher tax liability than if the income had been taxed in the respective years to which it belongs.
Salaried employees (government, PSU, and private sector) and pensioners who receive arrears of salary, commuted pension, gratuity, voluntary retirement compensation (VRS), or advance salary paid in lump sum during the current financial year that pushes them into a higher tax bracket.
Visit incometax.gov.in, enter your 10-digit PAN as User ID, and authenticate with your password and OTP.
Click on 'e-File' → 'Income Tax Forms' → 'File Income Tax Forms'. In the search bar or under 'Persons with Business/Professional Income', select 'Form 10E'.
Choose the Assessment Year in which the arrears were received (e.g., select AY 2026-27 if arrears were credited during FY 2025-26) and click 'Continue'.
Select Annexure-I (Salary Arrears). In Table A, enter your total income for the current year (including and excluding arrears) and calculate the tax difference. Then, add previous financial years one by one, entering the original taxable income and the reassessed income with arrears.
The portal automatically calculates Relief under Section 89 in Row 10 [Step 3 minus Step 7]. Preview the form, accept the verification statement, and e-verify using Aadhaar OTP or Net Banking.
If your Section 89 relief was denied due to missing or delayed Form 10E submission, here is the official rectification protocol:
Log in to the e-Filing portal, prepare and e-verify Form 10E for the relevant Assessment Year using your employer's arrears break-up sheet.
Go to 'Pending Actions' → 'e-Proceedings' and locate the communication issued under Section 143(1)(a) or Section 139(9).
Select 'Agree with adjustment' or submit a revised return under Section 139(5) citing the Form 10E acknowledgment number. The CPC will reprocess the return and grant the full refund.
Understanding the 4-step statutory formula ensures you enter accurate values in Table A:
Compute the total tax payable on your total income of the current year including the arrears (Amount A).
Compute the tax payable on your current year income excluding the arrears (Amount B). Step 1 Difference = A - B.
For each year to which the arrears belong, compute tax on income with arrears (Amount C) and tax without arrears (Amount D). Step 2 Difference = C - D.
Relief under Section 89 = (Step 1 Difference) minus (Step 2 Difference). If the current year additional tax is greater than the past years' additional tax, the difference is your tax relief. If it is negative or zero, no relief is admissible.
Solutions to common technical and calculation bottlenecks during Form 10E e-Filing.
| Problem | Root Cause | Action to Take |
|---|---|---|
| Portal shows 'Relief calculated is zero or negative' | Tax rates in past years vs current year | If your tax rate in the current year is equal to or lower than the past years, no additional tax burden occurred. You cannot claim Section 89 relief; leave the field blank in your ITR. |
| Employer refuses to provide year-wise arrears breakup | Salary slips or bank credit history for past years | Government and corporate employers are legally mandated to issue a Due-Drawn Statement. You can also re-construct the figures from past Form 16 Part B and payroll records. |
| Error: 'Annexure details do not match gross salary' | Gross salary in current year Form 16 | Ensure the current year taxable salary entered in Table A matches the 'Gross Total Income' shown in Part B of your current year Form 16. |
| Cannot select previous years older than 10 years | Portal archive limitations | The portal allows selecting up to past assessment years. If arrears span beyond the dropdown limit, consult your Assessing Officer for manual verification. |
Yes. The Finance Act explicitly allows individuals opting for the New Tax Regime under Section 115BAC to claim relief under Section 89. Form 10E must still be submitted online prior to filing the return.
7th Pay Commission arrears frequently trigger higher tax slabs. You must obtain the Due-Drawn Statement from your Drawing and Disbursing Officer (DDO), file Form 10E on the e-Filing portal mapping the arrears to the specific financial years, and claim the relief in Row 89 of your ITR-1 or ITR-2.
No. Form 10E is only required in the specific financial year in which you actually receive salary arrears, pension arrears, or advance compensation in lump sum.
Yes. A legal heir receiving accumulated family pension arrears can file Form 10E under Table A (Family Pension) to mitigate higher tax bracket impact in the year of disbursement.
If your employer deducted full TDS on arrears without factoring in Section 89 relief, you do not lose out. Submit Form 10E yourself on the income tax portal, claim the relief in your ITR, and the excess TDS will be refunded to your bank account with interest.
Statutory relief mechanism designed to eliminate bracket creep caused by lump-sum arrears disbursements.
Checked on November 4, 2026
View Reference Document ↗Mandates the electronic submission of Form 10E through the e-Filing portal as a mandatory condition for claiming Section 89 relief.
Checked on November 4, 2026
View Reference Document ↗
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Mandated under Section 89(1) of the Income-tax Act, 1961. Submitting Form 10E online through the e-Filing portal prior to filing your ITR is compulsory to receive relief.
File Form 10E on Income Tax Portal →