Arrears relief under 89(1)
Tax relief when you receive salary for earlier years
Worked example
Using the default values, arrears relief under 89(1) gives a no relief available of ₹0.
| Item | Value |
|---|---|
| Income before arrears | ₹12,00,000 |
| Arrears received | ₹0 |
| Tax without arrears | ₹1,79,400 |
| Tax with arrears | ₹1,79,400 |
| Extra tax because of them | ₹0 |
| No years entered yet | — |
| Extra tax had they been paid then | ₹0 |
| Relief under 89(1) | ₹0 |
| Tax you actually pay | ₹1,79,400 |
| Saved | ₹0 |
What you need
- Taxable income this year, before arrears
- Arrears, split by the year they relate to
Questions
Do I have to file Form 10E?
Yes, and before the return. The department disallows 89(1) relief where Form 10E has not been filed, and it is a common reason for a demand notice after an otherwise correct return.
When is there no relief?
When your income was already in the top bracket both then and now. The relief comes from the difference in slab rates between the two years — if there is no difference, there is nothing to claim.
Does this apply to gratuity and pension arrears?
Yes, 89(1) covers salary arrears or advance, family pension arrears, gratuity, commuted pension and compensation on termination, each with its own rules.
Important
Relief under section 89(1) exists because arrears push you into a higher bracket in the year you receive them, even though the income was earned earlier. It is the difference between the extra tax now and the extra tax you would have paid had the money arrived on time. Form 10E must be filed on the income tax portal before you file the return, or the relief is disallowed. This uses old-regime slabs for the earlier years, which held steady from 2014-15 to 2024-25; for years outside that range, check the slabs that applied. Relief is not available on arrears already exempt, such as VRS compensation claimed under section 10(10C).