Query regarding retirement benefits

Since salary/retirement benefits are taxable on a due or receipt basis, whichever is earlier, your reporting in FY 2024-25 was legally correct. Do not file an updated return for FY 2024-25. Instead, log into the portal and submit online feedback in the FY 2025-26 AIS stating that this income was already reported in the previous financial year. If a mismatch notice is generated for FY 2025-26, simply submit a response explaining that the tax was already accounted for on a due basis, backed by the retirement order and your FY 2024-25 ITR copies.

The existing reply is correct , retirement benefits are taxable in the year of RECEIPT, not when they became due. Report in FY 2025-26 (AY 2026-27). No updated return for FY 2024-25 is needed.

However, there is one more important step: Section 89 RELIEF.

When you receive salary arrears or deferred retirement benefits in a lump sum in one year, it can push you into a higher tax slab than if you had received the income spread across the years it related to. Section 89 of the Income Tax Act compensates for this.

How to claim it:

1. File Form 10E on the income tax portal BEFORE filing your ITR. If you file the ITR first, the department disallows the Section 89 claim and raises a demand.

2. Form 10E has a table where you recalculate tax as if the amount was received in the respective years. The difference is the Section 89 relief.

3. Enter the relief amount in Schedule 10E of your ITR.

This is not automatic , you have to actively compute and claim it. For government employees with gratuity and leave encashment, there are also separate exemptions under Sections 10(10) and 10(10AA) which need to be applied first before computing the taxable balance.

For a full walkthrough of pension, gratuity, and leave encashment taxation rules for AY 2026-27, this [pension and retirement income tax guide](https://taxgarden.in/blog/income-tax-on-pension-india-ay-2026-27-commuted-uncommuted-family) covers the exemption limits and Form 10E process.

but those retirement benefits are already declared in the ITR for the FY 2024-25

Do not file an updated return for FY 2024–25 solely because the benefits now appear in FY 2025–26 AIS/26AS. The relevant year generally depends on when each amount was received or became taxable under the applicable provision, not simply when retirement occurred or the benefit became due. Since the benefits were paid in FY 2025–26, check each component and its tax treatment before changing either return.

• Reconcile the FY 2025–26 AIS/26AS entries with the payment dates, benefit-wise documents and TDS certificates; AIS/26AS reporting does not by itself determine the year of taxability.
• If any amount was taxable in FY 2024–25 and was omitted or incorrectly reported, consider the appropriate correction for that year, subject to the available filing provisions and deadlines. If taxable on receipt in FY 2025–26, report it in that year’s return and claim any applicable exemption.
• An updated return is generally not a route to reduce tax or claim/increase a refund. The exact treatment depends on the benefit components and what was disclosed in the FY 2024–25 return.

For retirement-benefit reporting, the key workflow is reconciling payment records, AIS/26AS and the return year component by component. Manual review across two assessment years can be time-consuming; automation can reduce repetitive matching while leaving taxability and exemption decisions under your control. Our platform offers 2,000+ AI agents and 650+ integrations across only relevant workflows. For a walkthrough focused on return reconciliation, WhatsApp https://wa.me/message/3HVOZ7HIY4ESC1.