Claiming tax relief on salary arrears, advance pay or gratuity? Here’s why Form 10e must be filed before ITR

Salary arrears, advance pay, gratuity and certain other lump-sum payments can increase your tax liability by pushing up your total income for a financial year. To reduce this burden, the income tax law allows eligible taxpayers to claim relief under Section 89 of the Income-tax Act.

However, taxpayers can claim this relief only if they file Form 10e before submitting their income tax return (ITR). Although this form has been replaced by the newly introduced Form 39, it continues to be available on the income tax department’s e-filing portal.

Who should file Form 10e?

All registered individual users on the e-filing portal can furnish particulars of their income in Form 10E for claiming relief as per Section 89 of Income Tax Act, 1961.

Taxpayers claiming this relief must file Form 10E before submitting their ITR if they have received any of the following:

• Salary or family pension received in arrears (Annexure I)
• Salary or family pension received in advance (Annexure I)
• Gratuity for past services (Annexure II & IIA)
• Compensation received from a current or former employer on termination of employment after continuous service of not more than 3 years or where the unexpired portion of term of employment is also not less than 3 years (Annexure III)
• Commutation of pension (Annexure III)

The appropriate annexure in Form 10E must be selected based on the nature of the payment received.

How to file Form 10e?

A taxpayer must follow the given steps for filing Form 10e well in advance before they file their income tax return:

Step 1: Log in to the income tax e-Filing portal using your PAN (User ID) and password.

Step 2: Go to e-File, then click on income tax forms and select file income tax forms option from the dropdown menu.

Step 3: Search for Form 10E and select it.

Step 4: Choose the relevant Assessment Year (AY) and click on Continue.

Step 5: Click let’s Get Started.

Step 6: Select the applicable category of income, such as salary arrears, advance salary, gratuity, compensation or commuted pension.

Step 7: Verify your personal information and complete any missing details in the My Profile section, including your residential status, if required.

Step 8: Fill in the relevant annexure based on the nature of the payment received and enter the required details.

Step 9: Enter the Place, tick the declaration checkbox and click Save.

Step 10: Click Preview to review the form and make changes, if necessary.

Step 11: If all the details are correct, click Proceed to e-verify and complete the verification using your preferred method.

Once e-Verification is successful, Form 10E will be submitted. An acknowledgement number will be generated and sent to your registered email ID and mobile number.

What will happen if you fail to file Form 10e?

If you fail to file Form 10e but claim relief under Section 89 in your ITR, your income tax return will still be processed but the relief claimed under the relevant section will not be allowed, according to the income tax department’s website.

Filing Form 10e is mandatory if you want to claim a tax relief on your arrear or advance income, whichever is applicable.

Form 10e — Key highlights

• Once Form 10e is submitted after verification, and acknowledgment is generated, it cannot be edited. Please ensure that all the details are correct before submission.
• Form 10e cannot be submitted without a valid PAN of the individual.
• It can only be submitted online through the Income Tax e-Filing portal.
• The form has separate sections to claim relief in case of receipt of additional salary, gratuity, retrenchment compensation, etc. The individual can fill in the relevant details in the respective sections to do the needful.