What is Section 89 relief?

When salary arrears or advance are received in one year and push you into a higher slab, Section 89(1) lets you compute tax as if the amount had been received in the years it relates to and claim the difference as relief.

Is Form 10E mandatory?

Yes. Since AY 2015-16 the relief is allowed only if Form 10E is filed online before the return. Without it the department disallows the relief and raises a demand.

Does the employer give Section 89 relief in TDS?

The employer may consider the relief under Section 192(2A) if you furnish the particulars in Form 10E to the employer, but most deduct on the full amount and leave the claim to the return.

Which years' tax rates apply to the arrears?

Each earlier year's share is taxed at the rates and on the income of that year, as reported in that year's return.

Does relief apply to gratuity and pension too?

Yes. Form 10E has separate annexures for gratuity received for past service, commuted pension and compensation on termination.

Section 89 Relief Calculator (Arrears)

Relief on salary arrears or advance received in a lump sum, computed the Form 10E way across up to three earlier years.

Switch tool

Current-year regime

Current-year taxable income incl. arrears (₹)

₹

Total arrears received this year (₹)

₹

Year −1 taxable income

₹

Arrears for year −1

₹

Year −2 taxable income

₹

Arrears for year −2

₹

Year −3 taxable income

₹

Arrears for year −3

₹

Form 10E relief

Tax this year incl. arrears

₹ 0

Tax this year excl. arrears

₹ 0

Extra tax caused by arrearsstep 3

₹ 0

Year −1: tax had it been paid then

₹ 0

Year −2: tax had it been paid then

₹ 0

Year −3: tax had it been paid then

₹ 0

Tax payable in earlier yearsstep 5

₹ 0

Relief under Section 89(1)

₹ 0

Indicative only. Current year at FY 2025-26 rates under the chosen regime; earlier years computed on old-regime slabs for an individual below 60 (unchanged since FY 2017-18). Surcharge, special-rate income and the Annexure II/III (gratuity, commutation) cases are not covered. File Form 10E online before the return or the relief is denied.

How it works

Extra tax now

Tax on this year's income with and without the arrears; the difference is what the lump sum costs you at this year's rates.

Tax then

Had each year's share been paid in that year, it would have been taxed at that year's rates on that year's income; the tool adds those up.

Relief

The excess of now over then is the relief, entered in the return after filing Form 10E.

Why arrears need Form 10E

Salary is taxed in the year it is received, so a pay revision paid as arrears pushes several years' income into one year and often into a higher slab. Section 89(1) with Rule 21A lets you compute the tax as if each year's share had arrived on time and claim the difference as relief. The claim is made in Form 10E on the e-filing portal before submitting the return; since AY 2015-16 the department disallows the relief if 10E is missing, and the demand notice follows.

Which years

Arrears are allocated to the years they relate to, per the employer's arrears statement. Form 10E has room for several; this tool takes three.

Old slabs for old years

Earlier years are recomputed at the rates of those years. The old-regime slab has been stable since 2017, which is what the tool uses.

Form 16 shows gross

The employer deducts TDS on the full amount; the relief is yours to claim in the return, and the refund follows.

Also for pension and gratuity

Family pension arrears, commuted pension and gratuity beyond the exemption have their own annexures in 10E.