Introduction to Form 10E and Its Importance
Form 10E is a crucial tax form that helps salaried individuals claim relief under Section 89(1) of the Income Tax Act. It ensures fair taxation on income that’s received in arrears or advance. If you’re someone who received past dues like salary arrears, gratuity, or compensation in FY 2025-26, then filing Form 10E is not just helpful—it’s mandatory before claiming relief in your Income Tax Return (ITR).
The Income Tax Department requires Form 10E to be submitted online through the e-filing portal. If you fail to file it before submitting your ITR, your claim for tax relief can be rejected—even if you’re eligible.
This article will walk you through the calculation process, eligibility, filing steps, common mistakes, and tools (like the Excel-based automatic calculator) to help you manage your tax filing smoothly.
What is Section 89(1) of the Income Tax Act?
Section 89(1) allows taxpayers to claim relief when they receive part of their salary or income in arrears. Without this provision, the tax on arrears would be calculated at the current year’s slab rate, potentially increasing the tax burden.
Let’s simplify the math:
If you’re in the 30% tax bracket now but the arrears belong to years when you were in the 10% bracket, Form 10E adjusts the taxation to ensure you’re not overpaying due to shifted tax slabs.
This section provides tax justice by calculating your income tax on a year-wise distribution basis, which ensures fair taxation and prevents you from falling into a higher slab unfairly.
Who Should File Form 10E in FY 2025-26?
If any of the following applies to you, you must file Form 10E in FY 2025-26:
You received salary arrears or bonuses for earlier years.
You were paid gratuity or pension arrears.
You received compensation on termination of employment.
You got commuted pension paid in a lump sum.
You received advance salary.
Important: You must file Form 10E before filing your ITR if you are claiming relief under Section 89(1).
Key Scenarios Where Form 10E is Mandatory
| Scenario | Form 10E Mandatory? |
|---|---|
| Salary arrears received for FY 2021-22 |  Yes |
| Advance salary received for FY 2026-27 | Yes |
| One-time bonus paid for past 3 years | Yes |
| Regular salary without any arrears |  No |
| Arrears received but not claimed in ITR | Relief denied |
These situations require careful reporting with the help of Form 10E. You can’t simply claim tax relief in your ITR without filing this form—it’s a precondition.
Benefits of Filing Form 10E
Tax Relief: Ensures you’re not taxed heavily due to arrears.
ITR Acceptance: ITR may be rejected if relief is claimed without Form 10E.
Correct Tax Calculation: Aligns income with correct assessment years.
Avoid Notices: Filing Form 10E can prevent scrutiny from the IT department.
Maximized Refunds: Helps in receiving due refunds by correcting overpaid tax.
Step-by-Step Guide: How to Fill Form 10E
Filing Form 10E is an online process done through the Income Tax e-filing portal. Here’s how to do it:
Step 1: Log in to Income Tax e-Filing Portal
Go to incometax.gov.in, log in using PAN, password and OTP (if enabled).
Step 2: Locate Form 10E Under e-File Menu
Navigate to e-File > Income Tax Forms > File Income Tax Forms.
Search for “Form 10E” and click on it.
Step 3: Enter Salary Arrears Details
Under the section “Annexure I,” enter the arrear amount, the financial year it pertains to, and the reason for the delay.
Step 4: Enter Previous Year(s) Income
You must also fill in details of your total income for the previous years to which the arrears relate.
Step 5: Verify and Submit
Double-check all entries, especially the amounts and assessment years, then click Submit.
A confirmation message will appear on your dashboard after successful submission.
Sample Calculation: Form 10E for FY 2025-26
Imagine you received â‚ą2,00,000 as salary arrears in FY 2025-26 for FYs 2022-23 and 2023-24.
Here’s how the tax impact changes:
| Particulars | Without Form 10E | With Form 10E |
|---|---|---|
| Tax slab applicable now | 30% | Adjusted |
| Tax on â‚ą2,00,000 arrears | â‚ą60,000 | â‚ą30,000 |
| Effective savings | â‚ą30,000 | â‚ą30,000 |
By properly allocating income to respective years, you pay only what’s due, not more.
How Form 10E Impacts Your Tax Refund
Many taxpayers overlook Form 10E, and as a result, their ITR doesn’t reflect actual relief. This often leads to lower refunds or delayed processing.
By filing Form 10E:
You unlock full relief under Section 89(1).
Your ITR becomes accurate and acceptable.
The refund amount increases, if you had paid excess TDS due to arrears.
Download Automatic Income Tax Arrears Relief Calculator U/s 89(1) with Form 10
E from the F.Y. 2000-01 to F.Y. 2025-26
