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

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Vinoth Kumar

29 Points Posted on 07 February 2024

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

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 (3)

Quick Summary

The availability of Section 89(1) relief, which addresses tax on arrears or advance salary, under the new tax regime (Section 115BAC) is a point of confusion. While some sources suggest it's not available, others clarify that Section 89(1) is a computational relief for lump-sum income and is distinct from deductions disallowed under the new regime. It appears that taxpayers opting for the new tax regime may still be able to claim this relief, provided they meet the conditions and file Form 10E.

Aashok Kumar Sharma

Finance/Compliance Consultant

73860 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

2068 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.

Aashok Kumar Sharma

Finance/Compliance Consultant

73860 Points Posted on 06 November 2026

Yes, Sec 89(1) relief is available under the new regime. The reply saying otherwise is incorrect.

• Sec 115BAC(2) lists the deductions and exemptions not allowed under the new regime (80C, 80D, HRA, LTA, standard deduction pre-2023, etc.). Relief under Sec 89 is not a deduction or exemption; it is relief from tax and is not on that list.

• Compute the relief using the new-regime slab rates for each year concerned (the year of receipt and the years to which arrears relate), using the regime actually applicable in those years.

• Filing Form 10E online on the e-filing portal before filing the ITR is mandatory (Sec 89(2)). Without it, CPC disallows the relief.

• Common case: arrears of salary or family pension. Commuted pension or gratuity beyond the exemption also qualify.

• Under the Income-tax Act, 2025 the relief continues (from tax year 2026-27), with the corresponding new form.