Form 10E - How to file?

Salaried individuals would receive an advance salary or arrears; if that is so, then the salaried employee would have to pay taxes on the total amount that has been received. However, the Income Tax Department will protect the employees from additional tax liabilities due to delays in receiving income under Section 89(1). In other words, if you get a portion of your salary in the form of arrears, you could claim tax savings under Section 89(1) on the same through Form 10E.

What is Form 10E Income Tax?

Form 10E is a mandatory form when you want to claim tax relief under Section 89(1). In this Section 89(1), you are eligible to claim tax relief for the delayed salary that has been received in the form of arrears. The arrears that have been received will be reflected in Part B of Form 16. Form 10E is needed for the furnishing of the particulars of received income under Section 192(2A) and could be filed by the Government servant or any employee working in a company, university, cooperative society, local authority, institution, association, or body.

Section 89(1) of the Income Tax Act - Explained

The income that a person earns during a given year is used to determine how much tax they owe for that year. Such incomes occasionally may include arrears or past dues that were paid in the current year.

Tax rates typically rise over time, which results in higher taxes in these circumstances. However, Section 89 of the Income Tax Act was created to provide you with relief in these kinds of circumstances (1).

This is based on the idea that a taxpayer should be responsible for paying taxes on their income in accordance with the tax rates that apply for the year to which the income belongs. 

A person may choose to take advantage of some tax relief under Section 89(1) and Rule 21A if they received any portion of their income, salary, or family pension in arrears or in advance.

How to Fill Form 10E?

You will have to follow the steps that are mentioned below to fill the Form 10E:

  • Step 1: You will have to log in to your tax e-filing account of yours.
  • Step 2: Navigate to the e-file and then the Income tax forms.
  • Step 3: Choose the option - Form 10E for relief under section 89.
  • Step 4: Choose the assessment year for when you need to file Form 10E.
  • Step 5: Choose the submission mode, and then you will have to click on the continue option.
  • Step 6: Fill in the applicable information and then click on save draft.
  • Step 7: For the salary arrears, you will have to select annexure-I and then fill out the applicable details.
  • Step 8: Select the preview and submit option to view the details and then submit the Form.

Things to Remember About Form 10E

There are some critical facts about Form 10E that you need to take into consideration:

  • Form 10E is compulsory for taxpayers claiming tax relief under Section 89(1) and 192(2A).
  • You cannot follow links that say Form 10E download, and Form 10E is completely filled online through the official portal.
  • If you have claimed a tax relief in the previous financial year but you have not filled in Form 10E, then the relief would be disallowed.
  • You will not be required to submit a copy of Form 10E with your Income tax return. But, it is still good practice to keep the copy with you.
  • If you get compensation for VRS and then have claimed a tax exemption for the compensation under Section 10(10C), the 89(1) deduction will not apply to you.
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