Tax time can be a bit like untangling a bunch of earphones that’s been in your pocket for months — frustrating and confusing. Especially when you’re dealing with arrears, or income that was due in earlier years but received in the current one. But don’t worry. In this guide, we’ll simplify everything for you — from understanding what arrears are to using the Arrears Relief Calculator U/s 89(1) with Form 10E in Excel format.
Whether you’re a salaried employee in the government or private sector, this step-by-step article will help you calculate your income tax arrears relief easily and accurately for the Financial Year 2025-26.
📌 Table of Contents
| Sr# | Headings |
| 1 | Introduction to Income Tax Arrears |
| 2 | What is Section 89(1)? |
| 3 | Why Do You Need Arrears Relief? |
| 4 | The Importance of Form 10E |
| 5 | When Should You Use Form 10E? |
| 6 | Step-by-Step: How to Calculate Relief Under Section 89(1) |
| 7 | What is an Arrears Relief Calculator U/s 89(1)? |
| 8 | Features of the Excel-Based Calculator |
| 9 | How to Download and Use the Excel Calculator |
| 10 | Example Scenario: Calculation in Action |
| 11 | Tips to Avoid Errors in Relief Calculation |
| 12 | Government vs Non-Government Employee Rules |
| 13 | Submitting Form 10E on the Income Tax Portal |
| 14 | What Happens If You Don’t Submit Form 10E? |
| 15 | Final Thoughts and Best Practices |
1. Introduction to Income Tax Arrears
Have you ever received a salary hike, bonus, or DA adjustment after a year or two? That’s arrears for you — money earned for previous years but paid now. While it feels great to receive the money, it can push your income into a higher tax slab for the current year.
You may also like- Automatic Income Tax From 16 Part B, which can prepare One by One Form 16 Part B for the F.Y. 2024- 25
2. What is Section 89(1)?
Section 89(1) is like a safety net. It helps you reduce the tax burden caused by a sudden spike in income due to arrears. The section allows you to calculate the tax as if you received the amount in the correct year, not all at once.
3. Why Do You Need Arrears Relief?
Without relief under Section 89(1), your current year’s tax liability could go through the roof. You’d be paying more tax just because your employer delayed your dues. Fair? Not really. That’s why arrears relief exists — to fix that unfairness.
4. The Importance of Form 10E
Form 10E is the gateway to claiming your relief. Think of it as your official request to the Income Tax Department saying, “Hey, I deserve a break on this extra tax.”
You may also like- Automatic Income Tax From 16 Part A&B and Part B, which can prepare One by One Form 16 Part A&B and Part B for the F.Y. 2024- 25
5. When Should You Use Form 10E?
You must use Form 10E when:
- You’ve received arrears (salary, pension, etc.)
- The arrears impact your tax bracket
- You want to claim relief under Section 89(1)
And yes, submitting this form is mandatory before filing your tax return to get the benefit.
6. Step-by-Step: How to Calculate Relief Under Section 89(1)
- Calculate total tax with arrears in the current year.
- Calculate the total tax without arrears for the same year.
- Find the tax difference.
- Calculate the tax for the previous years (when income was actually due).
- Compare the tax with and without arrears for those years.
- Compute the relief = Tax impact in the current year – Tax impact in the actual years.
Sounds tricky? Don’t worry — the Excel calculator simplifies this.
You may also like- Automatic Income Tax From 16 Part B, which can be prepared at a time, 50 Employees Form 16 Part B for the F.Y. 2024- 25
7. What is an Arrears Relief Calculator U/s 89(1)?
This tool — usually an Excel file — is like your personal tax assistant. You enter your income, arrears, and year-wise data. It does the math, calculates the relief, and even prepares your Form 10E. No number-crunching stress.
Download Automatic Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E in Excel Format for the F.Y. 2025
8. Features of the Excel-Based Calculator
- Auto-calculation of tax with and without arrears
- In-built Form 10E format
- User-friendly interface
- Govt. and Non-Govt. options
- Works for multiple financial years
- Designed for F.Y. 2025-26
9. How to Download and Use the Excel Calculator
- Download the Arrears Relief Calculator U/s 89(1) in Excel format from the above Link
- Open the file and enable macros.
- Fill in your basic details, income, and arrears info.
- It will auto-generate calculations and Form 10E.
10. Example Scenario: Calculation in Action
Imagine you received ₹1,50,000 as salary arrears for 2023 and 2024 in 2025.
Without relief:
- Your income jumps → tax increases
With relief:
- Calculator splits the arrears into earlier years
- Calculates taxes as if you got them back then
- You pay tax fairly, not extra
You may also like- Automatic Income Tax From 16 Part A&B, which can be prepared at a time, 50 Employees Form 16 Part B for the F.Y. 2024- 25
11. Tips to Avoid Errors in Relief Calculation
- Always cross-check year-wise salary and arrears
- Ensure correct tax slabs are applied
- Use government-notified calculators
- Don’t forget to submit Form 10E before ITR
12. Government vs Non-Government Employee Rules
While the basic calculation is the same, some exemptions and DA components differ for:
- Central/State Govt.. employees
- Private sector employees
Always choose the right employee type in the calculator.
13. Submitting Form 10E on the Income Tax Portal
- Log in to incometax.gov.in
- Go to e-File > Income Tax Forms
- Select Form 10E under “File Income Tax Forms”
- Fill in the same details as your Excel sheet
- Submit and download acknowledgement
14. What Happens If You Don’t Submit Form 10E?
Simple: No relief granted. The tax department will calculate your tax without arrears relief, and your refund or payable amount may be adjusted accordingly.
Don’t skip this step!
15. Final Thoughts and Best Practices
Tax laws may be complex, but tools like the Arrears Relief Calculator U/s 89(1) make your life easier. Use them wisely, and you’ll save both money and mental stress. Remember, it’s your right to claim what’s fair.
❓ Frequently Asked Questions (FAQs)
1. Is Form 10E mandatory for all employees claiming arrears relief?
Yes, without filing Form 10E, your claim for relief under Section 89(1) can be rejected.
2. Can I submit Form 10E after filing my income tax return (ITR)?
No, you should file Form 10E before submitting your income tax return.
3. What happens if I make a mistake in the calculator?
The relief amount could be wrong, and you might pay more tax or face queries later. Always double-check.
4. Can pensioners use Form 10E for arrears relief?
Absolutely! Pension arrears also qualify under Section 89(1), and pensioners can use the same process.
You may also like- Automatic Income Tax From 16 Part A&B, which can be prepared at a time, 50 Employees Form 16 Part A&B for the F.Y. 2024- 25
