What is Form 10E? A Payroll Professionals Guide to Section 89(1) Relief on Salary Arrears

Imagine this scenario.

Three days before the ITR deadline, an employee walks into your HR department holding an income tax notice. Six months earlier, they had received a ₹3 lakh salary arrear after their promotion was backdated. Payroll processed the payment correctly, TDS was deducted, and everyone moved on. What no one realised was that Form 10E was never filed before the ITR.

This is one of the most common reasons employees lose Section 89(1) relief. The issue usually isn’t the tax calculation itself. It’s missing the filing sequence or not maintaining a proper year-wise breakup of arrears when the payment was processed.

Section 89(1) exists to prevent salary arrears, advance salary, gratuity, and similar payments from being taxed unfairly simply because they were received in a different financial year. Form 10E is the statutory filing that allows the Income Tax Department to recalculate the tax liability and grant the appropriate relief.

For Assessment Year 2026-27, understanding Form 10E is even more important. While Form 39 has been introduced under the new Income Tax Act, Form 10E continues to govern relief claims for the current filing cycle.

Key TakeawaysForm 10E is mandatory if you’re claiming relief under Section 89(1) for salary arrears, advance salary, gratuity, family pension arrears, or other eligible payments.Always file Form 10E before your Income Tax Return (ITR). Filing the ITR first can lead to Section 89(1) relief being denied.Select the Assessment Year in which the arrears were received, not the year they relate to. This is one of the most common filing mistakes.Keep a year-wise arrears breakup, Form 16, and previous ITR details ready before starting the filing process.Section 89(1) relief is available under both the old and new tax regimes, although the portal’s calculation method differs depending on the assessment year.Form 10E remains applicable for the current filing cycle (AY 2026-27). Form 39 applies only under the new Income Tax Act for subsequent periods.For HR and payroll teams, accurate arrears documentation and timely employee communication are the simplest ways to prevent Form 10E-related notices and missed tax relief.

In this guide, you’ll learn who should file Form 10E, how Section 89(1) relief is calculated, the correct filing process on the Income Tax e-Filing portal, common mistakes that trigger notices, the transition to Form 39, and the payroll best practices that help HR teams ensure employees don’t miss their eligible tax relief.

What is Form 10E in Income Tax?

Form 10E is the statutory filing prescribed under the Income Tax Act, 1961 that a taxpayer submits to claim relief under Section 89(1) when salary, family pension, gratuity, or similar income arrives in arrears or in advance and gets taxed at a higher slab than it would have if received on time.

It’s filed online on the e-filing portal, and it needs to go in before the income tax return, not alongside it or after.

Quick note: The Income Tax Department prescribes Form 10E, but doesn’t issue it to anyone. So, the taxpayer has to file it. This distinction matters because it’s the taxpayer and not the department who’s responsible for getting this right.

You’ll also see people call this “Section 10E of Income Tax,” which is a mix-up. There’s no Section 10E. The relief lives in Section 89, and Form 10E is simply the vehicle for claiming it.

Form 10E vs Form 10EE: Key Differences

Form 10E and Form 10EE get confused constantly, so here’s the difference at a glance:

If an employee’s issue is arrears or a backdated payment, Form 10E is the one that applies. Once that distinction is clear, the natural next question is why this form exists at all, and that comes down to how the tax system treats income that arrives late.

Why is Form 10E Important? Understanding the Income Bunching Problem

Knowing what Form 10E matters only when you understand the real problem it’s solving. The problem is known as income bunching and it’s the reason Form 10E income tax filings exist in the first place.

How Income Bunching Increases Your Tax Liability

Most payroll teams don’t struggle because Section 89 is a complicated law. They struggle because arrears rarely arrive with a clean year-wise breakup, and by the time an employee notices the tax hit, the financial year has already closed.

Here’s the mechanism:

Say an employee earns ₹11.5 lakh in FY 2024-25 and also receives ₹2.5 lakh in arrears that year for work done in an earlier year. Their total income for tax purposes becomes ₹14 lakh, which can push them into a higher tax slab rate, even though ₹2.5 lakh of that money was never meant to be taxed at this year’s rate.

That’s income bunching, and it’s an accident of timing, not a change in what the employee actually earned. The Income-tax Act builds in relief precisely so that a portion of income not belonging to the current year doesn’t inflate the current year’s taxable income.

Why this matters for payroll teams: Employees usually discover this problem only when they sit down to file their ITR, because payroll deducted TDS correctly for the year the payment was made, not for the year it was earned. By then, correcting the record takes more back-and-forth than it would have if the arrears breakup had been flagged at disbursal.

Taxation Fairness

Arrears received in a financial year are taxable in that year by default. Section 89 exists to correct that default, provided Form 10E is submitted before the ITR. The relief works by recalculating tax for two years, the year the amount was originally due and the year it was actually received, then adjusting the liability as though the payment had landed on time.

Skip the form, and the department has no basis to treat the arrears as anything other than ordinary current-year income; the Assessment Year and Financial Year distinction that the relief depends on never gets applied.

Understanding this fairness principle explains why the form matters. The next question is naturally how the department actually arrives at the relief figure.

How Does Section 89(1) Provide Tax Relief on Salary Arrears?

Understanding why the relief exists is one thing but seeing how the department actually arrives at the rupee figure is what makes the concept useful in practice, and it’s the part of 10E income tax filings people ask about most.

Section 89(1) Relief Calculation

The calculation isn’t just a simple calculation, but a four-way comparison that runs through seven steps. Skipping the why here leaves employees confused about the numbers they eventually see on the portal.

• Calculate tax payable on the total income, including additional salary, in the year it is received.
• Calculate tax payable on the total income, excluding additional salary, in the year it is received.
• The difference between steps 1 and 2 is the additional tax liability created by the arrears.
• Calculate tax payable on the total income of the year the arrears relate to, excluding the arrears.
• Calculate tax payable on the total income of the year the arrears relate to, including the arrears.
• The difference between steps 4 and 5 is what the tax would have been if the arrears had landed in the correct year.
• The excess of step 3 over step 6 is the relief allowed. If step 6 is larger than step 3, no relief applies.

Every field on the online form maps back to one of these seven steps, which is why filling it in without understanding the sequence often produces a number that doesn’t match expectations.

Tax Relief Calculation Formula with Worked Examples

Mr A earned ₹11.5 lakh in FY 2024-25 (AY 2025-26) and received ₹2.5 lakh in arrears that year, relating to FY 2023-24, when his total income was ₹5.5 lakh.

Relief = ₹45,500 – ₹27,500 = ₹18,000.

That ₹18,000 is what Mr A saves by filing Form 10E instead of letting the arrears get taxed at this year’s rate.

Once you’ve run this comparison yourself, or used a Section 89(1) relief calculator, you enter the resulting figure on the portal rather than trying to reverse-engineer it from salary arrears taxation rules after the fact.

The calculation tells you the number. The next question most HR teams actually get asked is whether a given employee needs to go through this at all.

Who Should File Form 10E: Eligibility Criteria and Common Scenarios

Form 10E is not for every taxpayer, but it becomes mandatory once an employee wants relief on arrear or advance income under section 89(1). The clean rule is: if delayed salary, pension, or similar income has pushed tax higher, Form 10E is the filing that unlocks the relief.

Mandatory Filing Requirement: When Form 10E is Compulsory

Filing Form 10E is mandatory if the taxpayer wants to claim relief on arrear or advance income under salary. It’s only mandatory, though, if the taxpayer is actually seeking the Section 89(1) benefit, and the relief itself is only allowed if the arrears increased the tax liability.

No increase, no relief, and effectively no reason to file. That’s the practical answer to how to fill form 10E for arrears of salary: file it when, and only when, the timing of the payment has cost the employee money in tax.

Applicable Income Types Covered Under Form 10E

The income types this covers are broader than most people assume:

• Salary received in arrears or in advance
• Family pension received late, as arrears
• Gratuity
• Commuted value of pension
• Compensation on termination of employment
• More than 12 months’ salary landing in a single financial year
• Premature withdrawal from Provident Fund

That list matters for HR because it extends well past routine salary revisions. Gratuity payment taxation and leave encashment questions during separation or retirement processing often trace back to this same relief mechanism.

Form 10E for Pension Arrears and Family Pension

Pension arrears deserve a separate mention, because the numbers involved can be severe. One documented case involved a pensioner underpaid for ten years, from 2006 to 2016, with the entire arrears finally paid in one lump sum that landed the employee in the highest tax bracket with TDS deducted at source.

Form 10E’s Annexure I is built for exactly this, letting the year-wise breakup spread that decade of underpayment across the years it actually belongs to, instead of taxing it all as one enormous windfall in a single year.

Cases like this are why pension and family pension arrears shouldn’t be treated as a rare edge case; for older employees and pension beneficiaries, this is often the single largest tax event of the year, and the relief matters proportionally more.

Once you know an employee is eligible, the next step is actually getting the form filed correctly, which is where most of the practical friction shows up.

How to File Form 10E Online: Step-by-Step Procedure

Eligibility tells you whether an employee should file. The portal is where that intent turns into an actual claim, and this is where most of the real-world mistakes happen.

If you’re searching for how to fill form 10E or how to fill 10E form online, the walkthrough looks simple on paper: log in, find Form 10E under e-File, pick the assessment year, fill in the arrears breakup, review, e-verify, done.

Step 1: Login to Income Tax e-Filing Portal

Log in to the Income Tax e-Filing Portal with your PAN and password. Before you start, your PAN status needs to be Active and you need to already be a registered user.

Step 2: Navigate to Form 10E Under e-File Menu

From the dashboard, go to e-file > Income Tax Forms > File Income Tax Forms, then search for or select Form 10E from the list.

Step 3: Select Assessment Year and Income Types

This is the single most common error in the entire process of how to file form 10e income tax, so it’s worth stating plainly: select the assessment year in which the arrears were received, not the year they relate to.

If arrears were paid out in FY 2023-24, choose AY 2024-25, regardless of which earlier year the money was actually earned in.

Click Continue, then Let’s Get Started, and select the applicable items regarding the particulars of income.

Step 4: Enter Arrear Details and Financial Year Breakup

This is where the year-wise Table A comes in, capturing how much of the arrears belongs to each prior year. Confirm the personal information tab too, and make sure all mandatory details under My Profile, including residential status, are complete before moving on.

Before you touch Preview, cross-check this breakup against the employer’s arrears statement line by line. Most Form 10E errors trace back to a mismatch here, not to the tax calculation itself.

Step 5: Review Auto-Calculated Tax Relief

Since AY 2024-25, the portal’s default calculation runs on the new tax regime under Section 115BAC(1A). Years before that still use old-regime slabs. If an employee’s ITR was filed under the old regime, don’t assume the portal figure is correct.

It’s worth manually checking the old-regime tax and entering that figure instead if there’s a mismatch.

Step 6: Submit Form 10E and Download Acknowledgement

Once the details are confirmed across all tabs, click Preview. If everything checks out, proceed to e-verify your return through any of the portal’s supported verification modes.

After e-verification, Form 10E gets submitted and an acknowledgement number is generated and sent to the registered email and mobile number. Save that number, since employers sometimes ask for proof of filing before adjusting withholding.

Filing the form is useful only if the numbers going into it are accurate, which brings up the documentation employees need before they even open the portal.

Documents Required to File Form 10E

Filing on the portal is only as accurate as the numbers you feed into it, which makes the paperwork behind form 10E income tax filings worth getting right before you start. It isn’t paperwork-heavy in the sense of attachments, since nothing gets uploaded with the return, but the underlying figures need to be solid.

Form 16 and Salary Breakup from Employer

Form 16 is the first document that matters, since the arrears will reflect in Part B of it. You can get the additional salary or arrears amount from the arrear document your employer provides, then subtract that from the total salary shown on Form 16 to arrive at income excluding arrears.

Arrears Calculation Statement from Employer

The field for salary or family pension received in arrears gets populated from a year-wise breakup, and this is the most common documentation gap in the entire process.

The employer’s statement needs to show three things: the total arrears amount, which financial year each portion belongs to, and the TDS deducted under Section 192.

Employees often receive only a lump-sum figure with no year-wise split at all, and without that split, there’s nothing for Table A to work with. This is the single biggest reason Form 10E filings stall or get filed with rough estimates instead of exact figures.

Previous Year’s ITR Details

You also need the prior year’s total income figure, both including and excluding the arrears, to run steps 4 and 5 of the calculation.

That figure is available from the downloaded ITR acknowledgement under e-File > Income Tax Returns > View Filed Returns, or from AIS and Form 26AS for the relevant prior year.

With the paperwork in hand, the next practical question is simply when all of this needs to be done by.

Form 10E Filing Deadline and Sequence

Good documentation still needs to reach the portal on time to count for anything. There’s no standalone deadline carved out specifically for Form 10E, and that catches a lot of people off guard.

When is the Last Date to File Form 10E

Form 10E has to be filed before the ITR filing deadline, which for AY 2026-27 is 31st July 2026 for most individual taxpayers, or 31st December, 2026 for a belated return.

Filing Sequence: Form 10E Before ITR Submission

That sequencing isn’t optional. File the ITR first and claim Section 89(1) relief without having filed Form 10E, and the near-certain outcome is a non-compliance notice from the department asking why the relief wasn’t backed by a filed form.

No copy of Form 10E needs to be attached to the return itself, since ITRs are annexure-less, but the assessment year selected on Form 10E should always match the financial year the arrears were actually received in, not the year they relate to.

The deadline covers when to file. It’s worth pausing next on which tax regime the portal is actually calculating against, since that’s a separate and frequently missed source of errors.

Form 10E in New Tax Regime vs Old Tax Regime

The deadline covers when to file. It’s worth pausing on which regime the portal is actually calculating against, since that’s a separate and frequently missed source of errors in form 10e income tax filings.

Is Form 10E Applicable Under the New Tax Regime?

Section 89(1) relief is available under both tax regimes, so the question isn’t whether an employee under the new regime can claim it, they can. The real nuance sits in how the portal computes the underlying comparison, which is really a 10E income tax mechanics rather than an eligibility one.

How Relief Calculation Differs Between Tax Regimes?

That split matters most for employees who opted for the old tax regime versus new tax regime on their actual ITR. If that’s the case, don’t take the portal’s auto-calculated figure at face value; work out the old-regime tax manually and enter that instead, since the system’s default won’t reflect what the employee is actually paying.

Regime mismatches are one filing-time problem. A bigger and more common one is what happens when Form 10E gets filed too late, or not filed at all before the return goes in.

Can Form 10E Be Filed After Filing Income Tax Returns

This is the question HR fields most often after the ITR deadline has already passed and an employee realizes, too late, that they skipped a step.

Filing Form 10E After ITR: Is It Possible?

Yes, but it’s not the ideal order. Form 10E is meant to be submitted before both the original and revised return. If an employee failed to file it before the original return, they can still file Form 10E now and follow it with a revised Income Tax Return to claim relief under Section 89.

How to Revise Form 10E After Submission?

The straight answer to the question, “Can Form 10E be revised?”, there’s no option to revise it. If details were entered incorrectly the first time, the fix is to file a fresh Form 10E for the same assessment year with corrected figures.

The new filing supersedes the earlier one. If the ITR was already submitted based on the incorrect version, that also needs to be revised.

Revised ITR Process After Late Form 10E Filing

A revised return can be filed up to 31 December of the relevant assessment year, even after an intimation under Section 143(1) has already arrived, since that intimation isn’t a final assessment. If the intimation flags mistakes, they can be corrected through this same ITR rectification route on the e-filing website.

Filing late is recoverable, as this section shows. Not filing at all carries a different and more direct consequence.

Penalty for Non-Filing of Form 10E and Income Tax Notice

Late filing has a fix, as the previous section covers. Not filing at all is a different situation, and it’s worth being direct about what it actually costs in form 10E income tax terms.

What Happens If You Don’t File Form 10E for Arrears?

There’s no standalone penalty attached to skipping Form 10E, but the practical consequence is close enough to one. If Section 89(1) relief is claimed in the ITR without a corresponding Form 10E on file, the return still gets processed, just without the relief.

Taxpayers in this situation typically receive an income tax notice stating that the relief under Section 89 hasn’t been allowed because the online Form 10E wasn’t filed, and that filing it is required under Section 89 of the Act.

Income Tax Notice for Non-Filing: Section 143(1) Intimation

The disallowance gets communicated through an intimation under Section 143(1), issued after ITR processing is complete. That intimation can only be issued within nine months of the end of the financial year in which the return was filed, and it covers any relief claimed under Section 89, 90, 90A, or 91, along with rebates.

How to Respond to a Form 10E Related Income Tax Notice

If that notice arrives, here’s how you can respond to it:

• Log in to the e-filing portal.
• Go to Pending Actions, then e-Proceedings, then select e-Assessment.
• Select the adjustment under Section 143(1)(a).
• Review the mismatch flagged and submit the response against it.
• If the mismatch is a genuine error on the return, file a revised return to correct it.
• If there’s no actual error but you disagree with the CPC’s adjustment, file a rectification application under Section 154(1) instead.

A notice from the department is the worst-case scenario. Most Form 10E problems never get that far, because they’re caught, or missed, much earlier at the point of data entry.

Common Form 10E Validation Errors and How to Fix Them

This is the part of how to fill form 10e and how to file form 10e that almost no competitor guide actually covers, even though it’s where most of the day-to-day friction lives.

Relief Amount in ITR Exceeds Form 10E

Form 10E wasn’t filed first, or was filed with a relief figure lower than what’s now claimed in the ITR.

Fix: File or re-file Form 10E first, then match the ITR entry to the figure the form generates.

Assessment Year Mismatch

Assessment Year chosen based on the year the arrears relate to, instead of the year they were received.

Fix: Always select the Assessment Year of the year of receipt.

My Profile Incomplete/Residential Status Not Set

Mandatory profile fields, especially residential status, left blank unintentionally.

Fix: Update My Profile first, then return to Form 10E; this doesn’t change the tax calculation, only submission.

These three account for the bulk of stalled filings we hear about, and all three are fixable in a few minutes once you know which one you’re looking at. Portal-related e-filing errors beyond Form 10E follow a similar pattern of sequence and profile issues rather than genuine calculation problems.

How to Download Form 10E Acknowledgement After Filing

Once e-verification is complete, Form 10E is submitted and an acknowledgement number is generated and sent to the registered email and mobile number. There’s no separate offline document to download; instead, the filed form itself is viewable on the portal at any point afterward.

To pull it up, go to e-file > Income Tax Forms > View Filed Forms > Forms as per Income Tax Act 1961, where the submitted form will be displayed.

Keep that acknowledgement number the same way you’d keep an ITR acknowledgement: it’s the proof of filing an employer may ask for before adjusting withholding, and it’s the reference point if a notice ever needs to be responded to later.

Form 10E Excel Format Download and PDF Resources

Downloading the acknowledgement is a post-filing step. Before filing, some employees and payroll teams prefer to work through the numbers offline first, which is where Form 10E income tax calculators and reference sheets come in.

Form 10E PDF Download (Offline Reference)

There’s no need to download Form 10E itself, since submission happens entirely online after logging in to the e-filing portal. The official PDF is still useful purely as a reference to understand the fields, annexure structure, and regime-specific calculation before entering data on the live form.

Form 10E Excel Calculator Template

A simple Excel template mirroring the seven-step relief formula and the year-wise comparison from the worked example above is often the fastest way to sanity-check a number before it goes anywhere near the portal. Keka’s income tax calculator covers this same seven-step logic if you’d rather not build the sheet from scratch.

Form 39: What Changes for AY 2026-27 and Beyond

Form 10E is being phased out, but not this filing season, and the distinction between the two matters way more than only the change itself.

What Form 39 Is?

Under the Income Tax Act, 2025 and the Income Tax Rules, 2026, which took effect from 1 April 2026, Form 39 replaces Form 10E for claiming relief on arrears, gratuity, retrenchment compensation, and pension commutation. The new form is governed by Section 157(1) of the 2025 Act and Rule 73 of the 2026 Rules.

When Form 39 Actually Applies?

• AY 2026-27: Relief under the Old Act still requires filing Form 10E, under the 1962 rules. This is the return due on 31st July 2026, and it still runs on Form 10E.
• Tax Year 2026-27 onward: Relief claimed under the new Act moves to Form 39.
• Return filed next year: Covers income earned in FY 2026-27, is where Form 39 becomes relevant for the first time.

Form 10E vs Form 39: Quick Comparison

For HR functions, the practical takeaway is simple: keep tracking arrears the same way for this filing cycle, since Form 10E is still the operative form, and start building awareness of Form 39 now so next year’s transition doesn’t catch anyone off guard.

Wrapping It Up

Form 10E isn’t just another income tax form. It’s the mechanism that ensures employees aren’t taxed unfairly simply because salary, gratuity, or pension payments reached them later than they should have. Filing it before the Income Tax Return is only one part of the process. Having the right payroll records, a clear year-wise arrears breakup, and accurate Form 16 data is what makes that filing successful.

For HR and payroll teams, the real challenge begins long before tax season. By the time employees start filing their returns, the payroll decisions that determine whether Section 89(1) relief can be claimed have already been made. Maintaining accurate arrears records, documenting payment history, and communicating filing requirements proactively can prevent avoidable notices, employee queries, and missed tax relief.

That’s where payroll automation makes a measurable difference. Instead of manually reconstructing salary records months later, teams can maintain complete payroll documentation from the moment arrears are processed, making Form 10E filing simpler for employees and compliance easier for HR.

With Keka Payroll, every arrears payment, Form 16, salary revision, and payroll record stays organised in one place, helping your team stay audit-ready while making tax season less stressful for everyone.

Tax Relief Starts with Better Payroll Records. See Keka in Action

Frequently Asked Questions (FAQs)

Q1. What is the 10E form in income tax?

• In case of receipt in arrears or advance of any sum in the nature of salary, relief under Section 89 can be claimed, and to claim it, the assessee has to file Form 10E. It’s been mandatory since AY 2015-16 for anyone claiming this relief.

Q2. How is 10E relief calculated?

• Relief equals the extra tax caused by the arrears in the year of receipt, minus what the extra tax would have been had the arrears been taxed in the year they relate to. If the second figure is larger, no relief applies.

Q3. Can we claim 10E in the new tax regime?

• Yes. The relief is available under both regimes. The portal’s auto-calculation defaults to the new regime for AY 2024-25 onward, so old-regime filers should double-check the figure manually.

Q4. How to file 10E Form for arrears of salary?

• Log in to the e-filing portal, go to e-File > Income Tax Forms > Form 10E, select the assessment year matching the year the arrears were received, enter the required salary and arrear details under Section 89, and submit before filing your ITR.

Q5. Can I file Form 10E after filing my tax returns?

• Yes, though it’s not the ideal order. Form 10E is meant to be submitted before the original or revised return, so if you missed it the first time, file Form 10E now and follow it with a revised return to claim relief.

Q6. What is the last date to fill the 10E form?

• There’s no separate deadline. It needs to precede the ITR, due 31 July 2026 for AY 2026-27 (31 December 2026 for belated returns).

Q7. Can Form 10E be revised?

• No, there’s no revision option. File a fresh Form 10E for the same assessment year with corrected details; if the ITR was already filed, revise that too.

Q8. What happens if you don’t file Form 10E for arrears?

• The ITR still gets processed, but the Section 89(1) relief gets disallowed. The disallowance shows up as an intimation under Section 143(1).

Q9. Is Form 10E mandatory for gratuity and leave encashment?

• Gratuity, yes, along with commuted pension, family pension arrears, and termination compensation. Leave encashment relief runs under a separate provision, so it’s worth checking that separately if it applies.