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.
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.
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.
You will have to follow the steps that are mentioned below to fill the Form 10E:
There are some critical facts about Form 10E that you need to take into consideration: