As a salaried individual, if you receive any advance salary or arrears, you may have to pay taxes on the total amount received. The Income Tax Department, however, protects you from any additional tax liability due to any delay in receiving income under Section 89(1). In other words, if you receive any portion of your salary in the form of arrears, you can claim tax saving under Section 89(1) on the same via Form 10E filing.
Under Section 89(1), you can avail of tax relief through recalculation of tax for both years (in which the arrears are received and the arrears pertain). The tax liability is adjusted after assuming that the arrears were received in the same year they were due.
What is Tax Relief under Section 89(1)?
As a taxpayer, the following types of arrears received are taxable in the same year they are received –
You can, however, reduce the additional tax liability due to any delays in receiving such income under Section 89(1).
What is Form 10E?
It is mandatory to fill out Form 10E if you want to claim tax relief under Section 89(1) of the Income Tax Act 1961. Under Section 89(1) of the Act, you are eligible to claim tax relief for delayed salary received in the form of arrears. Any arrears received are reflected in Part B of your Form 16.
Form 10E is required for furnishing particulars of received income under Section 192(2A) and can be filed by a Government servant or any employee working in a company, co-operative society, university, local authority, institution, association, or body.
How to File Form 10E?
The following steps explain the process of filing the Form 10E –
* Please note that the following Anexxtures are available under the page menu –
Important Things to Consider While Filing Form 10E
Consider the following aspects while filling out form 10E for claiming tax relief on salary arrears –
The steps mentioned above will help you file and submit Form 10E online to claim tax relief under Section 89(1) of the Income Tax Act 1961. Form 10E must be filed if you wish to reduce your tax liability on the salary payments received as arrears. In case you have any issues, concerns, or doubts related to Section 89(1), Form 10E, or tax filing, you must consult an expert to ensure that you file the income tax return correctly without any hassles.
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