1.         If you have accrued your salary in a financial year however got it in an alternate year, then Section 89(1) allows you to adjust the salary amount.

2.         Filling of  Form 10E is mandatory in request to claim relief in this case.

3.         The reason behind providing this relief is to guarantee that a taxpayer doesn't fall in the higher tax bracket essentially because the person got his salary arrears in an alternate year.

4.         In straightforward words, you need not pay tax on your income in the event that it was earned in an alternate year.

5.         Arrears or advance salary amounts can add up to increase the tax amount for taxpayers and this could hinder them from paying taxes. Thus, this could lead to a drop in the economy of the nation.

It is mandatory to fill Form 10E online on the off chance that you might want to claim relief as allowed under Section 89(1). While filing your income tax return, on the off chance that you claim relief without filling the structure, then the Income Tax Department will send you a circular regarding the same. The notification would state that you are not allowed to get relief because of the missing Form 10E.

Understanding Qualification for Relief under Section 89(1)

In a situation where you have gotten your annuity or salary in arrears or advance, then Income Tax Rules 21A aides you on the most proficient method to calculate your tax relief. We can assist you with understanding the calculation better with the assistance of the following advances:

1: Calculate the tax on your total income for the current financial year (this will include the amount got through arrears or advance salary). How about we call this Amount 1.

2: Presently, process the tax payable on your income without adding the arrears or advance. This is Amount 2.

3: Find out the distinction between the two amounts (Amount 1 – Amount 2).

4: Calculate the tax on your income for the year when the arrears arose (don't include the arrears). We can call this Amount 3.

5: For the same year, calculate the tax payable by adding the arrears or advance amount to your income. This is Amount 4.

6: Subtract the two Amounts (Amount 4 – Amount 3).

7: In particular if the amount in Sync 3 is more than that in Sync 6, a taxpayer can claim relief under Section 89(1).

Since Structure 10E under Section 89(1) gives tax relief to workers, it's important to top off and present the structure before a claim for relief is made. Keep in mind, by keeping your tax paperwork in request and filing on schedule, you can avoid paying an exorbitant fine for delayed taxes.

Download Automated Income Tax Arrears Relief Calculator U/s 89(1) along with Form 10E from the Financial Year 2000-01 to Financial Year 2020-21 (Up-to-date Version)