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The Income Tax Act, 1961 and its successive amendments don’t just contain details of how much tax is to be paid by an individual. It also contains multiple provisions and sections that are designed to reduce the tax burden of eligible individuals. One such section is Section 89 of the act that mentions some key tax deductions that eligible individuals can claim by filling out and submitting the Form 10E.
But before we go into the details of the Income Tax Form 10E, let’s first understand Section 89 in a bit more detail.
What is Section 89 of the Income Tax Act?
Section 89 of the Income Tax Act is primarily designed to reduce the tax burden that might arise from sudden lump sum payouts that an individual received from his or her employers or other select sources. Some examples of these lump sum payouts can include:
- Salary received in arrears or in advance (Annexure I of Form 10E)
- Gratuity received for service over 5 years but less than 15 years (Annexure II of Form 10E)
- Gratuity received for service of 15 years or longer (Annexure IIA of Form 10E)
- Compensation upon employment termination (Annexure III of Form 10E)
- Commutation of Pension (Annexure IV of Form 10E)
In case a lump sum payout you have received fulfills the above criteria, you can fill out Form 10E and its appropriate Annexure in order to claim tax relief u/s Section 89 of the Income Tax Act.
How Salary Arrears Impact Income Tax Burden
The tax payable by an individual is calculated based on income tax slabs from the applicable financial year based on the net taxable income of the investor. So, if you receive salary arrears or a salary advance in a particular year, your net taxable income will increase. This can result in additional tax burden especially if your net taxable income moves into a higher tax slab.
This is where Section 89 and its various subsections come in handy. Income Tax Act permits you to seek tax reduction as per section 89 if the taxpayer has received a portion of salary in advance/arrears or obtained family pension in delays. Of course to claim the relief you have to furnish the particulars of such income using the Income Tax Form 10E.
Why is Form 10E Necessary?
The 10E income tax form is valid only if submitted by an individual qualified to make a Section 89 claim. It must be submitted electronically through the income tax department's e-filing portal. In the case of salary arrears, Section 89(1) specifically deals with the tax relief that is provided by recalibrating taxes for the financial years during which salary was in arrears and had remained unpaid.
Additionally, adjustments are also made for overdue taxes for the financial years based on which salary arrears/advance was received. In order to ensure you can avail relief u/s 89 easily, make sure you submit Form 10E prior to submitting your income tax return documents.
What are the Different Part of Income Tax Form 10E?
There are 3 parts of Income Tax Form 10E and 5 Annexures to provide supporting information related to information provided in the initial parts of the form. These are:
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1. Details of Tax Payer – Name, PAN/Aadhaar of tax payer, residential status
2. Income amount eligible for Section 89 relief due to salary arrears/gratuity/payout for termination of employment/commutation of pension
3. Verification and declaration
The 5 annexures included in Form 10E need to filled out to provide details of the income for which relief is being sought. Only the applicable annexure is to be filled depending on the type of income for which relief is being sought. The annexures and their applicability details are as follows:
Annexure Name |
Applicability |
Annexure I |
For salary arrears/advance |
Annexure II |
For gratuity payout received after over 5 years of service but less than 15 years |
Annexure IIA |
For gratuity payout received after 15 years or more of service |
Annexure III |
For compensation received on termination of service |
Annexure IV |
For commutation of pension |
Each of these annexures contain multiple fields that need to be filled out if you wish to seek relief u/s 89 prior to filing your ITR for the applicable financial year. You can use an online income tax calculator to easily determine your due tax before and after claiming Section 89 tax relief.
Who Can Fill Form 10e Income Tax?
Under existing income tax rules, only individuals can seek income tax relief under Section 89. So, Income Tax Form 10E is only valid for individual tax payers and not for Hindu Undivided Family (HUF) or any other tax paying entities.
Why do you Need to Fill out Form 10e?
Section 89 relief of income tax is not applicable automatically. So if you have received compensation or payout that qualified for such relief and want to reduce your income tax burden, you need to mandatorily submit the Income Tax Form 10E. You can consider this as a declaration of income that is eligible for Section 89 relief so that you do not end up paying excess tax.
3 key details to keep in mind about Form 10E are:
- Only online submissions of Form 10E are accepted.
- Form 10E can be currently be submitted online on the Income Tax e-filing portal.
- You must submit Form 10E before submitting your income tax returns.
Also Read: Income Tax Rebate u/s 87A
Section 89 relief of income tax is not applicable automatically. So if you have received compensation or payout that qualified for such relief and want to reduce your income tax burden, you need to mandatorily submit the Income Tax Form 10E. You can consider this as a declaration of income that is eligible for Section 89 relief so that you do not end up paying excess tax.
3 key details to keep in mind about Form 10E are:
- Only online submissions of Form 10E are accepted.
- Form 10E can be currently be submitted online on the Income Tax e-filing portal.
- You must submit Form 10E before submitting your income tax returns.
Also Read: Income Tax Rebate u/s 87A
How to Fill Form 10e?
Mentioned below are the instructions and steps you need to follow:
Step 1
Visit the income tax e-filing portal
Step 2
Log into your e-filing account using login credentials like PAN/Aadhaar/Other User ID and password.
Step 3
Select the E-file option, then select "Income Tax Forms", and subsequently “File Income Tax Forms” as shown below:
Step 4
On the subsequent page, click on “Persons without Business/Professional Income”. You will now be able to see the Form 10E displayed as below:
Step 5
Click on “File Now” to start filling out the details of Form 10E online. Once you have verified all details filled in Form 10E, you can submit it. After online submission of Form 10E, you can proceed with filing your income tax return.
Points to Consider While Filling Form 10e
Here are a few crucial measures you must take and items you should keep in mind whenever you are submitting the Income Tax Form 10E:
- Form 1oE can only be filled and submitted online on the Income Tax e-filing portal.
- Form 10E must be submitted in order to request tax relief under Section 89(1).
- Neglecting Form 10E submission can lead to excess income tax deductions.
- When submitting 10E income tax form, the proper annexure must be chosen based on the type of compensation eligible for Section 89 relief.
- You must file Form 10E prior to submitting your income tax return (ITR).
- The 10E form may be submitted just before submission of tax returns as prior verification is not required from employer or tax authorities is not required.
- Post online submission, Form 10E does not need to be attached to the return document at the time of filing.
- Form 1oE can only be filled and submitted online on the Income Tax e-filing portal.
- Form 10E must be submitted in order to request tax relief under Section 89(1).
- Neglecting Form 10E submission can lead to excess income tax deductions.
- When submitting 10E income tax form, the proper annexure must be chosen based on the type of compensation eligible for Section 89 relief.
- You must file Form 10E prior to submitting your income tax return (ITR).
- The 10E form may be submitted just before submission of tax returns as prior verification is not required from employer or tax authorities is not required.
- Post online submission, Form 10E does not need to be attached to the return document at the time of filing.
Keeping the above information in mind can ease the process of filing income tax returns and ensure you get the appropriate extent of Section 89 relief. What’s more, if tax has already been deducted, you will be able to get income tax refund on the excess tax deducted.
What Happens if Form 10e is Not Filed?
If you don't submit Form 10E, your claim for Section 89 relief won't be accepted even if you have filed your income tax return on time. The Income Tax Department will inform you that Section 89 relief has been disallowed via intimation u/s 143(1) post processing of your ITR.
Frequently Asked Questions
Q1. What is Form 10E?
Form 10E is an income tax form that you need to mandatorily fill out and submit to claim tax relief under Section 89 of the Income Tax Act.
Q2. Who can submit Form 10E Income Tax?
Only individuals registered on the income tax e-filing portal can submit Form 10E for the purpose of claiming relief under Section 89 of the Income Tax Act of 1961.
Q3. What is Section 89(1)?
According to Section 89 of the Income Tax Act of 1961, tax relief can be availed by individuals in case they received certain type of compensation like salary arrears, salary advance, gratuity payout, etc. during the applicable financial year.
Q4. Why do you need to fill form 10E?
If you want to receive tax relief on your arrears/advance income, you must submit the 10e income tax form. Otherwise, your Section 89 tax relief claim will not be processed.
Q5. Where can form 10E be filed?
For filing the income tax 10E form, you need to visit the income tax e-filing portal and log into your e-filing account with appropriate credentials.
Source:
https://www.incometaxindia.gov.in/forms/income-tax%20rules/103120000000007826.pdf
https://www.indiafilings.com/learn/section-89-relief-of-salary/#:~:text=Tax%20is%20calculated%20on%20the,under%20section%2089(1)
https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-form/form10e-um
https://www.financialexpress.com/money/income-tax/how-income-tax-relief-under-section-89-on-salary-arrears-works-check-calculation/2532915/
https://taxguru.in/income-tax/file-form-10e-tax-portal-arrears-sec-89.html
https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-form/form10e-faq
https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-form/form10e-faq#:~:text=If%20you%20fail%20to%20Form,89%20will%20not%20be%20allowed.
ARN No: Oct22/Bg/10A
