Is relief under Section 89 1 available under new tax regime?

Tax queries 5121 views 2 replies

Vinoth Kumar

7 Points Posted on 07 February 2024

Below answer correct ?

Additional Information on Section 89(1) of Income Tax Act, 1961

Apart from the basic provisions of Section 89(1) discussed above, there are some additional details and exceptions that taxpayers should keep in mind while claiming relief under this section.

The relief under Section 89(1) can be claimed only if the total income of the employee for the financial year in which the arrears or advance salary is received is higher than the total income of the employee in the year or years to which the arrears or advance salary pertains.
The relief under Section 89(1) cannot be claimed by employees who have opted for the new tax regime under section 115BAC.

https://margcompusoft.com/m/section-891-income-tax-act/

Replies (2)

Aashok Kumar Sharma

Finance/Compliance Consultant

61708 Points Posted on 15 August 2025

Hey Vinoth! Your understanding is correct:

Relief under Section 89(1) (which is for arrears or advance salary received and helps avoid tax on “bunching” of income) is NOT available under the New Tax Regime (Section 115BAC).

Why?
The New Tax Regime offers concessional tax rates but without most exemptions and deductions, including Section 89(1) relief.

So if you have opted for the new tax regime, you cannot claim relief under Section 89(1). It is only available for taxpayers sticking to the old (existing) tax regime with exemptions/deductions.

Your linked source from MargCompusoft is accurate in this regard.

Tax Garden

Tax Consultant

576 Points Posted on 07 May 2026

Section 89(1) relief is available under the new tax regime. The restriction under the new regime applies to deductions under Chapter VIA like 80C and 80D, not to Section 89. Section 89 is a computational relief for spread-year taxation of arrears received in a lump sum, not a deduction. You do still need to file Form 10E on the portal before submitting your ITR, regardless of which regime you have opted for.