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How to File Form 10E for Tax Relief on Salary Arrears?

Form 10E serves as a pivotal instrument for individuals in India seeking tax relief under Section 89(1) of the Income Tax Act.

  • 10,663 Views | Updated on: Mar 28, 2024

To claim tax relief on salary arrears received in a particular year, you will need to file Form 10E online on the Income Tax Department’s e-filing portal. The process involves logging in with your credentials, navigating to the “e-File” section, and then selecting “Income Tax Forms” followed by “Form 10E.”

In the preceding fiscal year, you may have fallen into a lower tax bracket. However, the inclusion of salary arrears might propel you into a higher tax slab. To seek tax relief for these arrears using Form 10E, individuals meeting the eligibility criteria need to collect pertinent documents, navigate to the income tax e-filing portal, complete the form, undergo electronic verification, and retain supporting documentation for future reference.

As a taxpayer, you can circumvent elevated tax payments on delayed income, such as arrears, by claiming tax relief under Section 89(1) of the Income Tax Act 1961. To avail yourself of this advantage, it is imperative to submit a 10E form online through the income tax authorities’ e-filing portal.

What is Form 10E?

If you want to apply for tax relief under Section 89(1) of the Income Tax Act of 1961, you must submit a 10E form. You are qualified to request tax relief for delayed salary received through arrears under Section 89(1) of the Act. Part B of your Form 16 contains a reflection of any received arrears.

Form 10E filing, which can be submitted by a government employee or any employee working for a business, cooperative society, university, local authority, institution, association, or body, is needed to provide specifics of revenue received under Section 192(2A).

What is Tax Relief under Section 89(1)?

Section 89(1) permits you to lessen the increased tax obligation brought on by any delays in receiving such revenue. The following arrears that you as a taxpayer receive are taxable in the same year that they are received:

  • Payroll Deferrals
  • Advance payment
  • Unpaid family pension
  • Pension for commuting

How to Fill Form 10E?

Filing form 10E requires following simple steps. You have to go through these instructions to submit form 10E:

  • Go to the website https://incometaxindiaefiling.gov.in/.
  • Log into your e-filing account using your User ID, password, and date of birth.
  • Click on the ‘e-File’ tab and select ‘Income Tax Forms.’
  • On the next screen, enter your PAN and select ‘FORM 10E’ under the ‘Form Name’ drop-down menu.
  • Choose the correct Assessment Year (AY) for which you must file Form 10E.
  • Opt for the Submission Mode you prefer.
  • Provide relevant details and select ‘Save Draft.’
  • Since you are filing the form for salary arrears, select Annexure-I and enter the applicable information.
  • Verify the form.
  • Click the ‘Preview and Submit’ button and check your entries before submitting.

How to Determine if You Qualify for Tax Relief?

As per Section 89(1), the income taxes for the year the salary was due and the year when you received it are recalculated to apply for the tax relief.

  • Calculate the tax payable for the year in which you received the arrears. First, calculate by including the arrear amount in your taxable income. Then, calculate after excluding it.
  • Subtract the second amount from the first. This difference is the tax on the arrears. Suppose this sum is A.
  • Now, determine the payable tax for the year the salary was delayed without adding the arrear.
  • Again, determine the tax payable after adding the arrear to your taxable amount.
  • Compute the difference between the two tax amounts. Suppose this sum is B. If A is higher than B, you can avail of the 89(1) relief.

Importance of Form 10E with the ITR

Form 10E plays a crucial role in claiming tax relief under Section 89(1) of the Income Tax Act, 1961, specifically when it comes to salary received in arrears or advance.

Filing 10E with ITR is mandatory for claiming tax relief. If you have received a salary in arrears (delayed payments) and want to claim tax relief under Section 89(1), filing Form 10E is mandatory. This section allows recalculating tax for both the year the arrears pertain to and the year they are received, resulting in potentially lower overall tax liability.

Who can File Form 10E?

Form 10E is a crucial tool for individuals in India who have received salary arrears or advance salaries related to previous financial years. This form, prescribed under section 89(1) of the Income Tax Act, offers relief to eligible taxpayers.

Received Salary Arrears or Advance Salary

The primary qualification for filing Form 10E is the receipt of salary arrears or advance salary. This implies that individuals must have experienced a delayed disbursement of salary or received a portion of their salary in advance, specifically about one or more financial years preceding the current assessment year.

Seeking Relief Under Section 89(1)

Form 10E is exclusively designed for individuals seeking relief under section 89(1) of the Income Tax Act. This section provides a mechanism to distribute the additional tax liability resulting from the receipt of arrears over multiple assessment years, preventing an undue financial burden in a single year.

Submission in Relevant Assessment Year

Eligible individuals must file Form 10E in the assessment year relevant to the financial year the arrears are received. This ensures that the relief is calculated and granted in the appropriate assessment year, aligning with the financial timeline of the arrears.

Importance of Claiming Relief

Claiming relief under section 89(1) through Form 10E is crucial to ensure fair and equitable tax treatment. Without filing for relief, individuals might end up overpaying taxes due to the lump-sum inclusion of arrears in a single assessment year. Form 10E facilitates the systematic spread of this tax liability.

Online Filing on the Income Tax Portal

Form 10E can be conveniently filed online through the official income tax e-filing portal. This streamlined process ensures efficiency and accuracy in claiming relief. Individuals must provide comprehensive details about the arrears received and relevant assessment years during the online submission.

Important Things to Consider While Filing Form 10E

Filing Form 10E is a critical step for individuals in India who have received salary arrears or advance salary and seek relief under section 89(1) of the Income Tax Act. However, to ensure a seamless and accurate filing process, it is crucial to consider certain key factors.

Eligibility Check

Before initiating the filing process, it is essential to ensure eligibility. Form 10E is specifically designed for individuals who have received salary arrears or advance salary related to previous financial years. Confirm that your situation aligns with the criteria outlined in the Income Tax Act.

Relevant Assessment Year

Form 10E should be filed in the assessment year corresponding to the financial year the arrears were received. Ensure accurate timing, as filing in the correct assessment year is crucial for the proper computation and granting of relief.

Accurate Arrears Calculation

Precise calculations of the arrears received are paramount. Individuals should clearly understand the total arrears amount and the specific financial years they relate to. Review salary slips, Form 16, and other relevant documents to ensure accurate figures.

Online Filing on the Income Tax Portal

Leveraging technology, Form 10E can be conveniently filed online through the official income tax e-filing portal. Familiarize yourself with the portal’s interface, and ensure you have a registered account. Online filing expedites the processing of relief claims.

Documentation

Gather and organize all necessary documentation before filing. This includes salary slips, Form 16, and other supporting documents related to the arrears received. Comprehensive documentation is crucial for accurate reporting and may be required for future reference or audits.

Verification of Details

Before submitting Form 10E, carefully review all the details provided. Ensure that the arrears are accurately entered, and double-check any other information required by the form. Verification is key to avoiding errors and ensuring a smooth filing process.

Aadhaar Verification or Physical Submission

The form can be verified electronically through Aadhaar OTP or by sending a signed physical copy to the Centralized Processing Centre (CPC) in Bengaluru. Choose the verification method that aligns with your preference and ensures compliance with the prescribed procedures.

Timely Submission

Form 10E should be filed within the stipulated time frame to avoid any delays or complications. Filing within the deadline ensures that relief, if approved, is granted on time.

To Sum Up

By facilitating the systematic spread of tax liability for salary arrears or advance salary, Form 10E ensures fair and equitable treatment for taxpayers. Form 10E provides a structured approach to navigating the complexities of tax relief, offering individuals a means to alleviate the financial burden associated with delayed salary payments.

By staying informed about any updates or changes in tax laws, taxpayers can confidently navigate the process, secure relief under Section 89(1), and maintain compliance with income tax regulations.

Key Takeaways

  • Filing Form 10E is mandatory for claiming tax relief under Section 89(1) when receiving salary arrears.
  • Section 89(1) allows taxpayers to reduce the increased tax liability resulting from delayed salary, arrears, advance payments, etc.
  • Form 10E is essential for individuals in India who receive salary arrears or advance salary related to previous financial years.
  • File Form 10E within the stipulated time frame to ensure timely processing and approval of relief claims.

FAQs

1

Is there a specific time frame within which I must file Form 10E for tax relief?

Yes, you must file Form 10E before filing your income tax return for the year you received the arrears.

2

Can I file Form 10E for tax relief on salary arrears for multiple financial years?

Yes, you can claim relief for arrears from multiple financial years in a single Form 10E.

3

Are there any limitations on the amount of tax relief that can be claimed using Form 10E?

There’s no upper limit on the tax relief amount, but it’s capped at the tax deducted on the arrear income.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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