Salary Arrears Relief Calculator โ Section 89(1) & Form 10E
Calculate tax relief under Section 89(1) when you receive salary arrears as a lump sum. Covers DA arrears, pay commission arrears, promotion arrears, and court-ordered payments. Step-by-step Rule 21A computation with Form 10E filing guide. Works with both old and new tax regimes for FY 2025-26.
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How to Use This Calculator
Section 89 Relief tab
Enter your current year income (without arrears), the arrears amount received, the financial year the arrears relate to, and your income in that year. The calculator performs the full Section 89(1) + Rule 21A computation in 6 steps, showing exactly how much tax relief you can claim. Select your tax regime (new or old) under "More options".
Multi-Year Arrears tab
When arrears span multiple financial years (common with DA arrears after pay commission revisions, or large court-ordered back-pay), enter the arrears portion for each year along with your income in that year. The calculator computes relief separately for each year per Rule 21A(2) and sums them up. You can add up to 3 years.
Form 10E Guide tab
Filing Form 10E is mandatory to claim Section 89(1) relief. This tab provides a step-by-step guide to filing Form 10E online on the Income Tax portal, the documents required, eligible vs ineligible arrears types, and common mistakes to avoid.
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The Formula
Section 89(1) relief is computed using Rule 21A of the Income Tax Rules. The calculation ensures you do not pay more tax just because arrears were received as a lump sum in a later year:
Step 1: Calculate tax on total income including arrears in the year of receipt
Step 2: Calculate tax on total income excluding arrears in the year of receipt
Step 3: Difference = A (extra tax due to arrears in current year)
Step 4: Calculate tax in the relevant year with income + arrears added
Step 5: Calculate tax in the relevant year on original income (without arrears)
Step 6: Difference = B (tax on arrears if received in the correct year)
Relief = A − B (only if A > B, otherwise relief = 0)
For multi-year arrears (Rule 21A(2)):
Calculate relief separately for each relevant year's portion of arrears.
Total relief = Sum of relief for all years.
The logic is straightforward: if receiving arrears in the current year causes more extra tax than it would have caused in the original year, the difference is your relief. If the original year would have resulted in the same or higher tax, no relief is available.
Example
Priya — Section Officer (Level 7), receives DA arrears
Priya is a central government Section Officer with basic pay ₹44,900. She receives ₹1,50,000 in DA arrears in FY 2025-26 relating to FY 2023-24. Her current year income (without arrears) is ₹8,00,000 and her income in FY 2023-24 was ₹7,00,000. She uses the new tax regime.
Step 1-3: Tax on arrears in current year
Step 4-6: Tax on arrears in relevant year
Relief calculation
In this case, Priya gets no relief because the arrears would have attracted more tax in the relevant year (where they pushed income from a nil-tax zone into a taxable zone) than in the current year. This is common when the relevant year's income was below the tax-free threshold.
When relief IS available
If Priya's current year income were ₹15,00,000 instead (putting her in the 15-20% slab), and her relevant year income was ₹10,00,000, the arrears would attract higher marginal tax in the current year than in the relevant year, resulting in meaningful relief.