form 10 E, RELIEF 89(1)

Salary in arrears or in advance, are allowed tax relief under section 89(1) read along with Rule 21A.

Step 1 Calculate tax payable on the total income, including additional salary – in the year it is received. This figure can be taken from your Form 16.

Step 2 Calculate tax payable on the total income, excluding additional salary – in the year it is received. You can get the amount of the additional salary (Arrears) from the arrear document given by your employer.

Now you have to subtract the arrear from the total salary received(including the arrears), which can be taken from your Form 16

After knowing the amount after arrear, you need to calculate the tax over the same.

Step 3 Calculate difference between Step 1 and Step 2

Step 4 Calculate tax payable on the total income of the year to which the arrears relate, excluding arrears

Step 5 Calculate tax payable on the total income of the year to which the arrears relate, including arrears

Step 6 Calculate difference between Step 4 and Step 5

Step 7 Excess of amount at Step 3 over Step 6 is the tax relief that shall be allowed.

Note that if amount at Step 6 is more than amount at Step 3 no relief shall be allowed.

Once you have calculated this amount, you can enter the values in Form 10E and proceed to file your return, and upload form 10E.