Form 10E Tax Relief: Ultimate Guide to Claiming Benefits in India

Learn Form 10E tax relief in India with our guide. Understand how to claim benefits under Section 89 and save on taxes.When it comes to income tax in India, salaried individuals sometimes face situations where they receive income in arrears or in advance, such as salary arrears, bonuses, or gratuity. These lump-sum payments can push you into a higher tax bracket, leading to a higher tax liability for the year. To address this, the Income Tax Act, 1961, provides relief under Section 89, and Form 10E is the key to claiming it. In this blog, we’ll break down what Form 10E is, who can use it, and how to file it.

What is Form 10E?

Form 10E is an income tax form used by salaried individuals in India to claim tax relief under Section 89 of the Income Tax Act. This section offers relief when you receive income that pertains to previous years (arrears) or future years (advance payments). The goal is to prevent excessive tax liability due to the bunching of income in a single financial year.

For example, if you receive salary arrears in 2025 for work done in 2023, taxing the entire amount in 2025 could increase your tax rate. Form 10E allows you to redistribute this income to the relevant years, potentially lowering your overall tax burden.

Why is Form 10E Important?

Without Form 10E, you cannot claim relief under Section 89 when filing your Income Tax Return (ITR). The form ensures that the tax department recognizes your request to spread the income across the appropriate years, calculating the tax as if the income was received in those years. This can result in significant tax savings, especially if the arrears push you into a higher tax slab.

Who Can File Form 10E?

Form 10E is applicable for:

• Salaried individuals who have received income in arrears, such as:
  • Salary or bonus arrears.
  • Gratuity or pension received after retirement.
  • Provident fund payments or other lump-sum benefits.
• Individuals who have received advance payments for future work.
• Taxpayers who want to claim relief to avoid higher tax rates due to lump-sum income.

When to File Form 10E?

Form 10E must be filed before submitting your ITR for the relevant assessment year. It is submitted online through the Income Tax Department’s e-filing portal. Filing this form ensures that the tax relief is reflected in your ITR, reducing your tax liability for the year.

How to File Form 10E: Step-by-Step Guide

A step-by-step guide to filing Form 10E for tax relief

1. Log in to the e-Filing Portal:
   • Visit the Income Tax Department’s e-filing website (incometaxindiaefiling.gov.in).
   • Log in using your PAN, password, and CAPTCHA.
2. Navigate to Form 10E:
   • Go to the “e-File” section and select “Income Tax Forms.”
   • Choose “Form 10E” from the list of forms.
3. Select the Assessment Year:
   • Choose the relevant assessment year for which you are claiming relief.
4. Fill in the Details:
   • Provide details of the arrears or advance income, including:
     • The amount received.
     • The financial year to which the income pertains.
     • The type of income (e.g., salary, gratuity, bonus).
   • The form includes tables to calculate the tax relief as per Rule 21A of the Income Tax Rules.
5. Submit the Form:
   • Verify the details and submit the form electronically.
   • Save the acknowledgment number for reference.
6. File Your ITR:
   • After submitting this Form , file your ITR and mention the relief claimed under Section 89.

Documents Required

To fill Form 10E accurately, keep the following documents handy:

• Form 16: Issued by your employer, showing details of salary and tax deducted.
• Salary Slips: To verify the arrears or advance payments.
• Bank Statements: If the payment was credited to your account.
• Details of Income: Information about the financial year to which the income relates.

Example: How Form 10E Works

Let’s say Priya, a salaried employee, received ₹2 lakh in salary arrears in FY 2024-25 for work done in FY 2022-23. Without relief, this ₹2 lakh would be taxed in FY 2024-25, potentially pushing her into the 30% tax slab. By filing Form 10E, Priya can redistribute the ₹2 lakh to FY 2022-23, where her income was lower, and she was in the 20% tax slab. The tax relief is calculated as the difference between the tax on the income in the respective years.

Key Points to Remember

• Mandatory Filing: You must file Form 10E to claim Section 89 relief; otherwise, the ITR system won’t process the relief.
• Online Only: Form 10E can only be filed online through the e-filing portal.
• Accuracy Matters: Incorrect details can lead to rejection of the relief claim.
• Consult a Professional: If you’re unsure about calculations or eligibility, consult a tax professional to avoid errors.

Conclusion

This Form is a powerful tool for salaried taxpayers in India to manage their tax liability on arrears or advance payments. By redistributing income to the relevant years, you can avoid paying higher taxes due to lump-sum receipts. Filing tax relief form is simple through the e-filing portal, but accuracy is crucial to ensure your claim is accepted. If you’ve received arrears or advance income, don’t miss out on this tax-saving opportunity!

For detailed guidance or to check your eligibility, visit the Income Tax Department’s website or consult a tax expert. Stay informed, file smart, and save on taxes!