Form 10E submission is required to claim relief in tax for salary arrears under section 89(1) from financial year 2014-15. In this post, you can get insight about how to submit form 10E online.
Form 10E submission and Relief under section 89(1):
Before learning procedure to submit form 10E online, Lets understand concept of relief under section 89(1).
What is relief under section 89 (1)?
Tax is calculated on salary received during the year. Some times employee receives salary in advance or in arrears. When salary is received in arrears, tax rate is higher and you need to pay higher taxes. To avoid this condition, tax laws has given relief to salaried persons in the form of section 89 (1).
How much relief is available under section 89 (1)?
Relief under section 89 (1) can be calculated by using following method.
|1||Tax payable on total income including arrears|
|2||Tax payable on total income excluding arrears|
|4||Tax payable on total income of the year to which arrears relate, excluding arrears|
|5||Tax payable on total income of the year to which arrears relate, including arrears|
|7 ( relief)||3-6|
If Step 6 is more than step 3, no relief u/s 89 (1) is available.
Example of relief under section 89 (1) :
Mr. Smart has Total income 5,20,000 in FY 2015-16 including salary arrears Rs. 1,00,000 for FY 2012-13. Total income of FY 2012-13 is 3,20,000.
|1||Tax payable on Rs.5,20,000 for FY 2015-16 – 29870|
|2||Tax payable on total income excluding arrears for FY 2015-16- on Rs.4,20,000- 15450|
|4||Tax payable on total income of the year to which arrears relate, excluding arrears for FY 2012-13-on 3,20,000-12360|
|5||Tax payable on total income of the year to which arrears relate, including arrears for FY 2012-13- on Rs. 420000-Rs. 22660|
|7 ( relief)=3-6||Rs. 4120|
Sumbimission of form 10E online:
If you claim relief under section 8 (1) but do not submit form 10E online, you ll receive notice from income tax department mentioning dis allowance of relief under section 89 (1).
To avoid this situation, you need to fill simple form on income tax e filling website.
Follow step by step mention below to fill form 89 (1) online:
Log in to income tax e filling website.
On your account dashboard, Click on menu ‘E-file’ and click on sub menu ‘ Prepare & Submit online form other than ITR’
Select form 10E from the list and assessment year. To claim relief under section 89 (1) for financial year 2015-16, select assessment year 2016-17.
Following screen will appear where there are 7 tabs.
In first tab, there are instructions to fill the form. Read all the instruction.
In second tab, you need to fill information in form 10E. In first part, enter basic details – name, pan card number, address , residential status ( Resident in most of the case).
In second part, Enter details of applicable income for which you are claiming exemption under section 89 (1).
- 1(a) : Enter amount of total salary received in advance or arrears in financial year.
- 1(b): Enter amount of total gratuity received in respect of past services
- 1(c): Enter amount of total compensation received from employer or former employer for early termination of service .
- 1(d) : Enter amount of total commutation of pension received.
Fill applicable annexure:
Next step is filling applicable annexture :
Annexure I is for salary received in advance or in arrears
Annexure II is for gratuity received for past services for the period of 5 years to 15 years.
Annexure IIA is for gratuity received for past services for 15 years or more.
Annexure III is for compensation received for termination of employment.
Annexure IV is for commuted pension received
How to fill annexure I ?
In annexure I, you need to enter details about following:
- Total income received in financial year without arrears
- Arrears amount
- Total income = Total of 1 and 2
- Tax on total income including arrears or advance
- Tax on total income excluding arrears or advance
- Difference between 4 and 5
- Tax computed as per Table A : It will be calculated automatic after filling Table A.
- Relief under section 89 (1): It will be calculated automatic. Compare it with relief claimed by you in Form 16.
How to fill Table A?
In table A, You need to enter following details:
- Detail of previous year for arrears received.
- Total income of previous year excluding arrears
- Arrears received related to previous year
- Total income of previous year including arrears : Total of 2 and 3
- Tax on total income excluding arrears : Tax on 2.
- Tax on total income including arrears : Tax on 4
- Difference of 6 – 5
Other annexture If applicable) is required to be filled as per salary details.
Submission of form 10E is required before filling income tax return. Avail our online paid service to get filed your return accurately by expert and file your Form 10E. Contact here.