About the Section 89(1) Arrears Relief Calculator
This Section 89(1) relief calculator works out how much income tax relief you can claim when you receive salary arrears (or advance salary) in one year that relate to earlier years. Because arrears are taxed in the year of receipt, they can push your income into a higher slab; relief under section 89(1) gives back the extra tax caused by receiving the money late, following the computation in Form 10E.
It is meant for salaried employees — including central and state government staff receiving pay-commission or DA arrears — who need the figures for Form 10E before filing their return, and for employers checking the relief they allow in TDS. Enter your total income for the year of receipt (excluding the arrears) and, for up to three earlier years, the total income originally taxed and the part of the arrears that relates to that year.
Tax is calculated for a resident individual under 60 using each year’s official slab rates for the regime you were taxed under, including the section 87A rebate (with the new-regime marginal relief from FY 2023-24) and the 4% health and education cess; surcharge for incomes above ₹50 lakh is not modelled. Enter total income after deductions such as the standard deduction. Form 10E must be filed online before you claim the relief in your return. From tax year 2026-27 the Income-tax Act, 2025 replaced the 1961 Act and continues an equivalent arrears relief; the calculator applies the FY 2025-26 slabs to that year.
With the default inputs, the relief under section 89(1) is ₹15,600.00. Change any value above to recalculate instantly.
How to use the section 89(1) arrears relief calculator
- 1Select the year you received the arrears, its tax regime and your total income for that year without the arrears.
- 2For each earlier year the arrears relate to, choose the year and the regime you were taxed under.
- 3Enter that year’s total income as originally assessed and the part of the arrears belonging to it.
- 4Read the relief and the Form 10E figures; the table mirrors Annexure I.
- 5File Form 10E on the income tax portal before claiming the relief in your ITR.
Formula and method
Form 10E first computes the tax on your income for the year of receipt with and without the arrears; the difference is the extra tax caused by the arrears. It then recomputes each earlier year’s tax as if the arrears relating to that year had been paid then, using that year’s slab rates, and adds up the increases. The relief is the first figure minus the second — and is zero if the earlier-year increase is larger.
Each tax figure includes the slab tax for the selected regime, the section 87A rebate (₹12,500 up to ₹5 lakh in the old regime and in the new regime until FY 2022-23; ₹25,000 up to ₹7 lakh in FY 2023-24 and 2024-25; ₹60,000 up to ₹12 lakh from FY 2025-26, with marginal relief just above those limits in the new regime) and the 4% cess. Surcharge is ignored.
- Income
- Total income for the year, excluding the arrears
- Arrearsᵢ
- Part of the arrears that relates to earlier year i
- Tax()
- Slab tax after 87A rebate, plus 4% cess
Worked examples
₹2 lakh arrears for FY 2023-24 received in FY 2025-26
In FY 2025-26 the arrears lift income from ₹18 lakh to ₹20 lakh, adding ₹41,600 of tax (20% slab plus cess). In FY 2023-24 the same ₹2 lakh would have raised income from ₹8 lakh to ₹10 lakh, adding ₹26,000. Relief is ₹41,600 − ₹26,000 = ₹15,600.
Old regime, arrears spread over two earlier years
All ₹3 lakh of arrears is taxed at 30% (plus cess) this year: ₹93,600 extra. Spread back, ₹2 lakh at 20% in FY 2022-23 (₹41,600) and ₹1 lakh in FY 2021-22 — where income crosses ₹5 lakh and loses the 87A rebate (₹23,400) — total ₹65,000. Relief is ₹28,600.
Received in FY 2024-25 (new regime) for FY 2020-21
Adding ₹3 lakh to ₹14 lakh in FY 2024-25 costs ₹83,200 more tax. Under the FY 2020-21 new-regime slabs the same arrears would have cost ₹57,200, so relief is ₹26,000.
Frequently asked questions
What is relief under section 89(1)?+
It is tax relief for salaried individuals who receive salary arrears or advance salary in a year other than the one it relates to. It removes the extra tax caused by the bunching of income, so you pay roughly what you would have paid had the salary been received on time.
Is Form 10E mandatory to claim 89(1) relief?+
Yes. You must file Form 10E online on the income tax e-filing portal before claiming the relief in your return. If you claim relief in the ITR without filing Form 10E, the Centralised Processing Centre will disallow it and may raise a demand.
Can I claim 89(1) relief under the new tax regime?+
Yes. The relief applies under both regimes. For each earlier year you use the regime under which your income was actually taxed in that year, which may differ from the regime you chose in the year of receipt.
Why is my 89(1) relief zero?+
Relief arises only when the arrears are taxed at a higher rate in the year of receipt than they would have been in the earlier years. If tax rates were higher back then, or your income has fallen, the earlier-year tax is larger and no relief is due.
Does 89(1) relief apply to gratuity and leave encashment?+
Section 89 also covers gratuity, compensation on termination and commuted pension received as arrears or in advance, using different annexures of Form 10E. This calculator handles the most common case: salary arrears (Annexure I).
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.