Form 10E – Relief under Section 89(1)
The employee must fill the Form 10E in cases of arrear/advance receipt, as otherwise the income received in arrears or advance shall be treated as the income of such financial year and will be charged on the applicable slab rate on the total income received during the year. In this article, you will get to know more about what is Form 10E, how you can get saved from the additional tax burden due to arrears with Form 10E, essential details to fill in Form 10E, and how to fill Form 10E online.
What is Form 10E?
In case of receipt in arrears/advance of any sum like Salary, relief under section 89 can be claimed, and to claim such relief we have to file Form 10E before filing the Income Tax Return.
Taxpayers will receive a notice from Income Tax Department if they claim relief under Section 89 without filing Form 10E and who have missed or failed to file this form will not be allowed to claim relief. Hence, filing Form 10E is mandatory.
Who can Submit Form 10E Online?
Form 10E is a form to be submitted by all Government servants, employees working in a company, cooperative society, any institution, local authority, university, or any association or body.
It is also to be filed by employees in case of working with more than one employer, for receipts from the previous employer, advance from current employer, or in case of receipt of arrears of pension /gratuity/ bonuses or other receipts in linked to current or previous employment or in the situation of termination.
What relief is provided under Section 89 with Form 10E?
For calculation and reduction of taxes chargeable on the taxpayer due to receipt of income concerning some other financial year, the government provided a tax relief under Section 89. Without Section 89 relief, the income received is added to the current financial year income and the taxpayer shall be charged on a higher slab rate than applicable.
Section 89(1), provides relief against additional tax burden on the taxpayer, by helping him report such receipts to the tax department under Form 10E. The relief is provided on the additional tax amount which is to be paid by the taxpayer in the year of receipt compared to the year in which he was entitled to receive such income. The portion of receipt eligible for claim under Section 89 has been provided under Section 21(A) of the Income Tax Act, 1961.
How to calculate the tax relief under Section 89 in Form 10E?
The amount of arrears or advance receipt to be eligible for relief under Section 89(1) with Form 10E can be calculated in the following manner:
For example-Mr. A has a Total Income of Rs. 5, 00,000 for FY 2019-20 and received arrears of Rs. 1,20,000/- for FY 2018-19. The Total Income for FY 2018-19 is Rs. 3, 50,000/-.
| FY 2018-19 | FY 2019-20 | ||
|
| Total Income without Addition | 3,50,000 | 5,00,000 |
| A | Tax Amount Payable | 5,200 | 13,000 |
| Total Income with Addition | 4,70,000 | 6,20,000 | |
| B | Tax Amount Payable | 11,440 | 37,960 |
| The difference in Tax Amount Payable (B-A) | 6,240 | 24,960 | |
| C | Tax relief under Section 89 (24,960-6,240) | 18,720 |
How to file form 10E?
Form 10E can be filed by the employee online on the common Income tax e-filling portal. Under the Income Tax forms Section, select ” Person without Business / Professional Income ‘. The arrears and the relief amount can be submitted in the required form selecting the relevant assessment year in which the relief is to be claimed.
The Form includes 7 parts to be filled out online:
- Personal Information- PAN and Contact Details
- Annexure I (Arrears) – Salary / Family Pension received in arrears
- Annexure I (Advance) – Salary / Family Pension received in advance
- Annexure II & IIA (Gratuity) – Payment in nature of Gratuity in respect of past services
- Annexure III (Compensation) – Payment in nature of compensation on Termination of Employment.
- Annexure IV (Pension) – Payment in commutation of pension
- Declaration
Once, the form is filled it is to be E-Verified online.
What are the due dates for filing Form 10E?
For advances or arrears received in any financial year, it is necessary to fill the form 10E before filing the ITR before the due dates. If a claim is made under Section 89, it is necessary to upload or fill the Form 10E before filing the return, otherwise, the ITR would not be processed by the IT department.
Can Form 10E be revised /rectified?
It is permissible for the taxpayer to rectify or revise the information in Form 10E. On the e-filing portal, you can apply for revision or rectification of Form 10E in the Forms / Returns section; you can select the revision of Form 10E.
What will happen if Form 10E is not filed?
In case the taxpayer avails relief under Section 89(1) without filing form 10E, in such cases, a tax notice /intimation under Section 143(1) shall be issued to the taxpayer with the related consequences.
Filling out the necessary tax forms is equally important as Filing Income tax returns. To know what all tax forms apply to you and your business – you can connect with us at info@taxreturnwala.com.