Relief u/s Section 89

Save Share

This query is : Resolved

Quick Summary

Section 89 relief through Form 10E Annexure III is available for terminal compensation subject to Rule 21A conditions, including 3 years of continuous service or a 3-year unexpired contract. Whether prior service with another employer counts depends on the facts and interpretation of the rule.

A Khaitan

A Khaitan (Querist)

20 June 2026 Assessee is a salaried person in employment at a Private Software co since Sep'2023. He was terminated in January'2026 and given a severance pay of 10 Lacs for the same in the name of Ex Gratia & Statutory Payment.Due to the extra payment of 10 lacs the assesee total income has exceeded 50 lacs leading to additional tax and surchage liability.

Can we file Form 10E (Part-Annexure-III) for claining relief under section 89 in Income tax.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

20 June 2026 While Form 10E (Annexure-III) is legally designed exactly for claiming Section 89 relief on terminal compensation/severance pay, the assessee in this specific case cannot claim the relief unless they satisfy the strict condition of at least 3 years of continuous service (or a 3-year unexpired contract term) under Rule 21A(4). Since their employment lasted from September 2023 to January 2026 (~2 years and 4 months), they fall short of the 3-year threshold, making them ineligible for the tax relief calculation under Annexure-III.

A Khaitan

A Khaitan (Querist)

20 June 2026 The assessee in this case was employed under some other employer before Sep'2023 and hence was in continous service though not under same employer.So the condition for continous service of 3 years is met if I am not wrong?As nowhere it is mentioned that the continous service has to be under same employer?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now