If you are eligible for tax relief for salary received in advance or arrears, you must fill form 10E. This relief is available under Sections 89(1) and 192(2A) of the Income Tax Act, 1961.
If read without Sections 89(1) and 192(2A), past salary received and salary received in advance can attract a higher rate of taxes. This is because the excess salary might push you to a higher tax slab.
By filling the online form 10E in the income tax portal, you can claim tax savings under Section 89(1). This is done by assuming that the salary was received in the same year that was due.
It is mandatory to fill out the online form 10E to claim the tax relief under Section 89(1)
If you are a taxpayer, the following types of income received in arrears (or in advance) will be taxable as if they were received in the same year.
Family Pension Arrears
Compensation received for termination of employment
You are enabled to claim reduced tax liability by filling the online form 10e in the income tax portal.
The process of filling the online form 10E from the income tax portal is fairly straightforward. There is no requirement to download form 10E online, as you are required to complete the form online.
Steps to Fill form 10E:
Step 1 - Visit the website https://incometaxindiaefiling.gov.in/. You will be prompted to log in with your credentials such as User ID, Password and Date of Birth.
If you haven’t created an account on the income tax portal, you can create an account with the necessary documents in this step.
Step 2 - Locate and click on the tab named “e-file”. Select “Prepare and Submit Online Form (Other Than ITR).
Step 3 - Verify that the PAN number appearing on the screen is correct, and select Form 10E from the drop-down menu next to the title “Form Name”.
Step 4 - Choose the correct Assessment Year. If you have doubts as to which is the correct Assessment Year, check out the next section. Once you’ve selected the correct Assessment Year, select Continue.
Step 5 - Carefully read the instructions on this page. Filling the form 10E is fairly straightforward from hereon.
Step 6 - Click on the blue tab titled “Form 10E” and fill out the following details
Name and address of the employee
Permanent Account Number or Aadhar Number
Salary received in arrears or in advance (In ₹)
Gratuity (In ₹)
Termination compensation (In ₹)
Commutation of Pension (In ₹)
The detailed particulars of the figures filled in subheads 4-7 will be filled in the respective annexures. Make sure to fill in amounts only on the subheads that are applicable for you.
Step 7 - Once you’ve filled in the details of the income received that is subject to tax relief under section 89(1), you’re mandated to fill in the details of the income in the respective annexures.
For Salary arrears or advance - select Annexure-I
For gratuity (5-15 years) select Annexure-II
For gratuity (15+ years) select Annexure-IIA
For compensation on employment termination select Annexure III
For commutation of pension select Annexure IV
Step 8 - If you have to exit the tab for any circumstance, select save draft. You can revisit without downloading Form 10E from the income tax portal. If you’ve followed the steps mentioned, and are satisfied you can preview the form one last time before submitting online. Select Preview & Submit once done.
Here are some important facts about form 10E that you’ve to take into consideration:
Form 10E is mandatory for taxpayers claiming tax relief under sections 89(1) and 192(2A).
If you are unsure of which assessment year to choose in the 4th step, choose the assessment year in which you received the income. (Not the year in which the income should have been received).
Do not fall for links saying “Form 10e Download”. Form 10E is completely filled online in the Income Tax portal. Here’s a template of form 10E.
If you’ve claimed tax relief u/s 89(1) or 192(2A) in the Previous Financial Year, but have not filled in form 10E, the relief will be disallowed.
You are not required to submit a copy of form 10E along with your Income Tax Return. However, it is good practice to keep a copy with yourself.
If you received compensation for VRS and have claimed a tax exemption for this compensation under section 10(10C), the 89(1) deduction does not apply to you.
We hope this post cleared all your queries surrounding Form 10E. If you are eligible for relief under section 89(1), make sure to take maximum advantage by filling form 10E in the online income tax portal. Happy savings!