What is Form 10E in Income Tax?

Salaried individuals may be required to pay their tax on the entire amount received when they receive salary payments in advance or as arrears. Nevertheless, the Income Tax Department protects employees from incurring additional tax burdens resulting from delays in receiving their income. To put it simply, if a certain part of one’s salary is received as arrears, they can claim the tax relief under the Section 89(1) using Form 10E, which can lead to tax savings.

What is a Form 10E in Income Tax?

Many of you must be wondering, ‘what is Form 10E’. Form 10E is a compulsory document to seek tax relief under the Section 89(1). This section allows you to request the tax relief for income received belatedly, often in arrears. The arrears received are typically documented in Part B of Form 16. Form 10E becomes essential for providing the necessary income details received under Section 192(2A). 

It may be submitted by government employees or individuals employed in various entities such as companies, universities, cooperative societies, local authorities, institutions, associations, or bodies.
 

What Is Relief Under Section 89(1)?

The tax is computed based on one’s total income earned throughout the year. Suppose their total income comprises of any past payments received in the same year. In that case, you might be concerned about facing higher tax liability on these overdue amounts (as tax rates tend to increase over time). 

To alleviate any additional tax burden caused by delayed income, tax laws provide relief under Section 89(1). In case you've received a part of the salary in advance or as arrear, or if you've received a retroactive family pension, you are eligible for tax relief under Section 89(1) when combined Rule 21A. In simpler terms, you won't have to pay extra taxes due to delayed payments.
 

Who Should File Form 10E?

Anyone is required to submit Form 10E when they have received the subsequent income in the preceding financial year:

• Family pension received in arrears
• Arrears of salary
• Gratuity
• Compensation on employment termination 
• Advance salary
• Commuted pension
   

Income Tax Notice for Non-Filing of Form 10E

Starting with income tax returns for a specific Financial Year, the Income Tax Department has introduced a mandatory requirement to file the Form 10E when you intend to seek relief under the Section 89(1). 

Moreover, taxpayers claiming relief under the Section 89(1) but haven't submitted Form 10E may receive the income tax notice from the concerned authorities. This indicates that the relief under Section 89 was not granted because they did not file the online Form 10E. The submission of the Form 10E is mandated under Section 89 of Income Tax Act.

How to File Form 10E?

To complete Form 10E income tax, please follow the steps outlined below:

• Step 1: Log in to your personal e-filing tax account.
• Step 2: Navigate to the "e-file" section and access "Income Tax Form."
• Step 3: Choose the option labeled " Form 10E income tax " for claiming relief under Section 89.
• Step 4: Select the relevant assessment year for which the Form 10E income tax is to be filed.
• Step 5: Opt for your preferred submission method and click the "Continue" button.
• Step 6: Provide the necessary information and click "save draft."
• Step 7: Select the "Annexure-I" for salary arrears and fill in the required details.
• Step 8: Choose the "preview and submit" option to assess the information and submit the 10E income tax.
   

Documents Required to File Form 10E

To file Form 10E income tax (Declaration under section 89(1) by a taxpayer for (advance salary/arrears), you typically need specific documents like:

• Form 16
• Salary slips
• Arrears/Advance salary statement
• Income tax return
• Bank statements
• Form 10E
• Permanent Account Number
• Calculation details of the relief under Section 89(1)
• Address and contact information
• Any other supporting documents 
   

Things to Remember About Form 10E

Take into account the following considerations when completing Form 10 E income tax to claim tax relief on the salary arrears:

1. You are required to submit Form 10E online electronically through Income Tax Department's website.
2. If you previously claimed the tax relief in a fiscal year but didn’t submit Form 10E, then you may receive a specific notice for non-compliance from the Income Tax Department.
3. You should file the Form 10E online prior to filing the income tax return.
4. Although salary arrears may relate to earlier fiscal years, when filling out Form 10E, you must choose an Assessment Year when you received your arrears.
5. You won’t be obliged to attach the Form 10E’s copy that you have submitted to the income tax return. However, it's advisable to keep the copy for your records.
6. While an individual’s employer may request confirmation, when you’ve submitted the Form 10E, it isn’t compulsory to provide the Form to their employer.
7. Section 89(1) Tax relief also applies to Family Pension that is received in terms of arrears.
8. If you have previously availed of tax exemption for Voluntary Retirement Scheme compensation under Section 10(10C), you won't be eligible for tax relief under the Section 89(1).
    

Conclusion

As per the form 10E meaning, the aforementioned steps will guide you in completing and submitting Form 10E for availing tax relief under the Section 89(1) of the Income Tax Act 1961 online. Filing Form 10E is essential to mitigate your tax obligations on salary arrears. If you encounter any difficulties, questions, or uncertainties about Section 89(1), Form 10E, or the tax filing process, it is advisable to seek advice from a tax expert. This will help ensure your income tax return's accurate and hassle-free submission.