When a taxpayer receives a portion of their salary or arrears for past years in a lump sum, it often pushes their income into a higher tax bracket for that year, increasing their tax liability. To avoid this unfair tax burden, the Income Tax Department allows relief under Section 89(1), but to claim it, one must file Form 10E.
This blog explains what Form 10E is, who should file it, how to submit it online, and why it is essential for claiming tax relief on salary arrears or advance payments.
Introduction
Sometimes, income does not come in when it is actually due. Many salaried employees receive arrears, delayed payments of salary, pension, or other dues from earlier years. While this extra payment feels like a bonus, it can unintentionally raise your total income for the current financial year, pushing you into a higher tax slab.
To correct this, the Income Tax Act provides relief under Section 89(1). But there is a condition: you must file Form 10E before filing an income tax return (ITR). If you do not, your relief claim can be rejected, and your refund delayed or reduced.
What is Form 10E?
Form 10E is an online form prescribed under the Income Tax Rules. It needs to be filed by individuals who wish to avail relief under Section 89(1) for the following types of income –
- Salary received in arrears or advance
- Family pension received in arrears
- Gratuity for past services
- Commuted pension
- Compensation for termination of employment
This form helps the Income Tax Department calculate what your tax liability would have been in earlier years if you had received the income on time and compares it with your current liability to give relief for the excess tax you would have otherwise paid.
Why is Form 10-E Important?
Many taxpayers make the mistake of claiming relief in the ITR without filing Form 10E, only to receive a notice later or have their refund withheld.
Here is why Form 10E matters –
- Mandatory for availing relief under Section 89(1)
- Ensures the tax department has the necessary breakdown of your income year-wise
- Helps avoid excess tax due to lump-sum or delayed payments
- Filing is online only; no paper form or physical submission is accepted
- Failing to file it can result in the notice under Section 143(1), delaying refund processing
So, even if your employer shows relief in Form 16, you still must file Form 10E separately on the portal.
Who Should File Form 10E?
You need to file Form 10E if –
- You received salary arrears due to pay revisions, promotions, or salary settlements
- You were paid an advance salary that includes income for future years
- You received gratuity, commuted pension, or termination compensation covering services of 5+ years
- You have arrears of family pension (for family members of deceased employees)
It is especially common among government employees, PSU staff, and retirees receiving delayed payments.
When Should You File Form 10E?
- File it before filing your Income Tax Return (ITR)
- You can file it after receiving Form 16, so that you have the arrears details
- Filing can be done any time before submitting the ITR, but not after
There is no separate due date, but filing Form 10E late or skipping it makes your claim for relief under Section 89(1) invalid.
Steps to File Form 10E Online
Filing Form 10E is easy if you have your annual details and a working income tax account.
Step 1. Log in to the Income Tax Portal
Go to https://www.incometax.gov.in and log in using your PAN and password.
Step 2. Go to ‘e-File’ → ‘Income Tax Forms’ → ‘File Income Tax Forms’
From the dashboard, navigate to the ‘File Income Tax Forms’ section under ‘e-File’.
Step 3. Search and Select “Form 10E”
Type “10E” in the search bar and select the appropriate assessment year (e.g., AY 2024–25 for FY 2023–24).
Step 4. Choose the Type of Relief
You will be asked to choose the reason for claiming relief –
- Salary received in arrears/advance
- Gratuity
- Commuted pension
- Compensation on termination
- Family pension received in arrears
Step 5. Enter Income Details for Previous and Current Years
You will need to break down your income across years, showing –
- What you earned in the year the arrears were received
- What you would have earned if paid on time
- Tax impact across the years
The portal automatically calculates the relief based on your entries.
Step 6. Review and Submit
Double-check all figures. Once you are sure, submit the form. You will receive an acknowledgment number.
Finally, now you can proceed to file your ITR with the relief claim.
Documents Needed to File Form 10E
Keep these details ready before filing –
- Salary breakup: Regular salary and arrears year-wise
- Form 16 from the employer
- Previous year ITRs (optional, but helps to refer for comparison)
- TDS details and tax paid
- Pension, gratuity, or compensation letters, if applicable
Although no documents are uploaded, the correct breakup of income is critical for accurate relief calculation.
What Happens If You Do Not File Form 10E?
If you claim relief in your ITR but skip Form 10E –
- Your relief under Section 89(1) can be rejected
- You may receive a notice or demand under Section 143(1)
- Your tax refund can be reduced or withheld
- You may end up paying more tax than necessary
To avoid these issues, always file Form 10E before your return if you are claiming any relief for past income.
Conclusion
Form 10E is essential for anyone receiving salary arrears, pension back pay, gratuity, or termination compensation. It helps you avoid paying extra tax just because your income was received late. Filing is simple, online, and must be done before you file your income tax return.
Ignoring Form 10E can lead to refund issues or tax notices, so even if it’s a one-time thing, it’s worth doing it correctly. Whether you are a salaried employee, pensioner, or legal heir, filing Form 10E is your way to get fair tax treatment under Section 89(1).
Reference
The Income-Tax Act, 1961 (Act No. 43 of 1961)
