Form 10E - How to Claim Relief under Section 89(1)
In many cases, individuals receive income in arrears or in advance, such as salary arrears, gratuity, or pension after retirement. When such income is taxed in the year it is received, it can push the taxpayer into a higher tax slab, resulting in a higher tax burden. To ensure fairness and avoid undue hardship, the Income Tax Act provides relief under Section 89(1). This relief adjusts the tax liability as if the income had been received in the relevant earlier years. But to claim this benefit, the filing of Form 10E is mandatory.
Understanding the Purpose of Form 10E
Form 10E is a declaration that must be submitted online through the Income Tax Department's e-filing portal. It helps the department verify your claim for relief under Section 89(1) for income received in arrears or in advance. Filing this form before submitting your Income Tax Return is crucial because failure to do so may lead to denial of the relief—even if the arrears are mentioned in your ITR.
The purpose of this form is not just to inform the tax department about the receipt of past dues but also to help them assess what portion of your current tax liability should be adjusted against your earlier year’s tax slabs.
When is Form 10E Required?
Form 10E needs to be filed in scenarios where the taxpayer has received income that pertains to previous financial years but is being taxed in the current year. Common examples include salary arrears due to pay commission revisions, delayed bonuses, gratuity received after retirement, or pension payments in lump sum.
Relief under Section 89(1) ensures that this additional income doesn't unfairly increase your tax liability by treating it as if it was spread across the years to which it actually belongs.
How to File Form 10E
Filing Form 10E is a straightforward process but requires careful attention. You must first log in to the Income Tax e-Filing portal using your PAN credentials. Once logged in, go to the 'e-File' tab and choose 'Income Tax Forms'. Select Form 10E under the list of available forms, choose the relevant assessment year, and click on 'Continue'.
In the form, you will need to fill out general information, income details, and select the appropriate annexure based on the type of income received. For instance, if you are claiming relief for salary arrears, you must use Annexure I. After filling in all the required information and reviewing it carefully, submit the form electronically. Once done, the portal will acknowledge the successful submission, which you should keep as proof for your records.
Why Filing Form 10E is Non-Negotiable
If you claim relief under Section 89(1) in your ITR but fail to submit Form 10E, your claim may be rejected. In many cases, taxpayers receive notices or reduced refunds due to this oversight. The Income Tax Department has made it mandatory to submit this form before filing the return in which relief is being claimed.
Moreover, while filing the ITR, you are not required to attach any physical copy of Form 10E or supporting documents, but they should be retained by you in case the department seeks clarification in the future.
Final Thoughts
Section 89(1) offers a practical and fair mechanism to adjust tax burdens arising from arrears or advance payments. Form 10E is the bridge that connects your claim to this relief. Filing it on time and accurately is not just a formality—it's a necessity. It ensures that your tax calculations reflect the true nature and timing of your income, sparing you from paying excessive tax.
1. What is Form 10E in Income Tax?
Form 10E is an online declaration that must be submitted on the Income Tax Department's e-filing portal when a taxpayer wishes to claim relief under Section 89(1). This relief is available when you receive income in arrears or in advance, such as salary arrears, gratuity, or pension.
2. Is it mandatory to file Form 10E to claim relief under Section 89(1)?
Yes, filing Form 10E is mandatory if you are claiming tax relief under Section 89(1). Without filing it, your claim may be rejected even if you mention the arrears in your ITR.
3. When should Form 10E be filed?
Form 10E should be filed before filing your Income Tax Return (ITR) for the financial year in which you received the arrears or advance income. Filing it late or after submitting your ITR can lead to disallowance of the relief.
4. Where can I submit Form 10E?
Form 10E must be submitted online via the Income Tax e-Filing Portal. You need to log in with your PAN and password, navigate to the “e-File” section, and select Form 10E under “Income Tax Forms.”
